Catapult Dual Directional Note

This month, we’re highlighting a note that was recently called after one year, delivering a strong return for clients in a relatively short period of time. It’s a great example of how thoughtful note design and active management can help take advantage of different market outcomes.

Trade Summary:

Structure: Catapult Dual Directional

Underlying: SMH (VanEck Semiconductor ETF)

Call Premium: 19.00%

Maturity: 3 years

Call Schedule: Callable only at the one-year mark

Outcome Features:

  • Full upside if held to maturity (1-to-1 participation)

  • 1-to-1 downside exposure, but only down to a preset level

  • If the note is held to maturity and SMH falls more than 30%, the loss matches how far SMH falls

Protection: 30% Barrier (70% of initial underlier price)

Initial Pricing Date: August 30, 2024 | Initial Price: $243.46

Call Evaluation Date: September 3, 2025 | Final Price: $286.43

Result: Called after 1 year for a 19.00% gain

What it Shows:

This outcome is a great example of what we aim to do at Ancorato:

  • Use thoughtful structure selection

  • Align notes with different market conditions

  • Actively monitor and manage investments to help capture opportunities like this one

In this case, the note navigated a significant intra-year decline, ultimately rebounding into a call and delivering a 19.00% gain in just 12 months, well ahead of many traditional strategies over the same period.

Why It Mattered:

This structure is called a Catapult because it gives the investor one chance, after one year, for the note to be called and pay a strong fixed return. If that doesn’t happen, the note continues and acts like a dual directional note, which can still benefit if markets recover.

This structure can be effective in several market scenarios:

  • If the market is uncertain or volatile, but ends up slightly positive after one year, the note pays the full call premium. That’s exactly what happened here: despite a drop of 26.1% to $179.95 in April 2025, SMH recovered fully, closing at $286.43 on the call evaluation date, nearly 18% above its starting price.

  • If the market had been down after one year, the note would have continued toward its full term, giving investors another opportunity to benefit from recovery. All while still offering downside protection if losses remained within the 30% barrier.

This flexibility, strong fixed return in the short term or continued opportunity in the long term, makes the Catapult Dual Directional structure a powerful tool in today’s unpredictable market environment.