How it works & education

Know how a note works before you own one.

Six short modules, a quick knowledge check and a risk acknowledgement. Members complete this before requesting term sheets or sending an order to their broker.

A bond and an option, sold as one note

The bond returns your capital. The option decides the coupon, the protection and the upside. Higher interest rates make the bond cheaper, which leaves more budget for the option.

Where $100 goes in an illustrative 5-year protected note: bond $86, option $12, costs $2.

Life of an autocallable

  1. Trade dateStrike is fixed

    Every trigger is a % of this level.

  2. Each quarterCoupon check

    Above the barrier, the coupon is paid. With memory, missed ones are paid later.

  3. Any checkAutocall test

    At or above 100%, capital is repaid early with the coupon.

  4. MaturityFinal redemption

    Below the barrier, capital falls one-for-one with the index.

Step 1 · Modules

Six short modules

Module 1 of 6 · 6 min

Fixed income basics

Bonds pay you interest for lending money. Their price moves when interest rates or the borrower's credit change.

  • Prices move opposite to yields: when rates rise, existing bonds fall.
  • Duration tells you roughly how much a bond's price moves for a 1% change in rates.
  • A credit spread is the extra yield you earn for the chance the issuer defaults.
  • Yield to maturity assumes you hold to the end and the issuer pays in full.
Key risk: Selling a bond before maturity can lock in a loss if rates have risen.
Step 2 · Knowledge check

Three quick questions

Unlocks when all six modules are read
1. A 3-year autocallable has a 60% barrier. At maturity the worst stock is at 55% of its start level. What do you get back?
2. Your capital-protected note says 100% protection. When can you still lose money?
3. Why does a basket of three volatile stocks usually pay a higher coupon than one of them alone?
Step 3 · Risk acknowledgement

I have completed the education section

  • I have read all six modules and understand how structured notes and bonds work.
  • I understand I can lose part or all of my capital if an underlying falls below its barrier, and everything if the issuing bank fails.
  • I understand notes may be hard to sell before maturity and that coupons can stop.
  • I understand The Fixed Income Guru gives information, not advice, and I will seek professional advice before investing.

Complete the modules and the knowledge check first.

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