Structured note

Also called: Structured product

A structured note is a bond-like security from a bank whose return is tied to an index or stock, often with a buffer or cap built in. The investor gets a packaged payoff in one product instead of assembling the options themselves.

What are the trade-offs of a structured note?

The convenience comes with costs: the payoff is set by the issuer, fees are embedded and hard to see, liquidity before maturity is limited, and you take on the issuer’s credit risk — if the bank fails, the note is an unsecured claim. The same option exposure can often be built directly with more transparency and control.

This definition is for educational and informational purposes only and is not investment, tax, or legal advice. Option strategies involve risk and are not suitable for all investors. Tax treatment of options is complex and depends on individual circumstances, holding periods, and applicable law. Consult a qualified tax professional and investment advisor before acting. Yayati Asset Management is a Registered Investment Adviser.