- If the index closes at more than the capital protection barrier of 50 per cent of its starting level of 7,000 (3,500), the autocall returns the holder's original investment.
- If the index closes below the capital protection barrier, the holder's loss mirrors the fall in the index, meaning they will lose 1 per cent of the investment for every 1 per cent the index has fallen.
Do be aware that, under this arrangement, the holder theoretically has the potential to lose all their investment, but only if the index were to fall to zero or if the counterparty failed to fulfil their obligations.
Richard Larner is head of research at Brooks Macdonald
Article continues after advert
Page 3 of 3
