An autocallable note is a structured investment product that offers you a chance of a relatively high payment (coupon) during or at the end of the term. However, it is not certain that the issuer will pay out that coupon. This depends on the price development of the underlying asset. However, with a favourable price development, the essence of an autocallable note is that it is redeemed before the end of the term. Then you will receive the principal sum plus the coupon value.
- You have a chance of a relatively high coupon if you have a moderately positive view of the expected price development of the underlying asset.
- An autocallable note has a fixed term, but can pay off much earlier. Namely when the underlying asset is higher than the reference value on a reference date.
- You have protection of your investment (principal sum) up to a certain level of price fall. That level is the so-called barrier.
- Your positive return is at most the coupon.
- When the barrier is broken, you run full price risk on the underlying asset.