Autocalls are a ‘fantastic success story’ as long as the markets don’t go down, beware of barrier options misuse

Autocalls are a very appealing payoff for providers and investors, but it is easy for investors not to fully appreciate the scale of the capital at risk embedded in a standard autocall construction, according to Frank Copplestone ( pictured ), managing partner at Levendi Investment Management. “One of the issues with traditional autocalls is that they embed path-dependent options,” said Copplestone. The way coupons are funded on a standard autocall is typically by the investor being