How do you read Structured notes (ELNs)?

The holder is also exposed to the issuing bank: if it does not pay, their value is lost whatever the index did. The income comes from the same mechanism as sold call options, with the same cap on the gain when the index rises.

Structured notes (ELNs)

ETFs and bonds

Notes a bank issues that pay according to an index's path, often with sold options built into them.

How it is worked out

The N-PORT filing shows them as bonds with the bank as issuer. Some income funds use them instead of selling call options themselves, and the ETF report counts them as a share of the fund.

How to read it

The holder is also exposed to the issuing bank: if it does not pay, their value is lost whatever the index did.
The income comes from the same mechanism as sold call options, with the same cap on the gain when the index rises.

Example

A fund with 85% in stocks and 15% in structured notes from three banks, paying according to the S&P 500.

Related terms

The other pages on US stocks, free to read. On the company pages, the last three fiscal years are open to everyone, five with a free account, and every year with Ploutos Investor.

US stocksThe market today, the sectors, the largest companies and the week's results.The market's sectorsThe 11 sectors side by side: returns, share of the market, median P/E and dividend.Compare stocksTwo companies side by side: price over up to ten years, with and without dividends, and every figure.US dividend stocksEach dividend's yield next to whether the company's cash covers it and whether it was ever cut.

Explanations of terms for learning, with examples from SEC filings.