Designed for down markets
A Catapult note multiplies your upside. If the market is up at the end of year one, you get a fixed premium and the note ends. If it's not, the note continues — and at maturity, your return is multiplied. Your principal is protected as long as the market isn't down more than a set level at the end of the term. This is a growth tool — designed to amplify returns without taking full market downside.
To show you how a Catapult note works, we'll use terms similar to a note we built recently. Market conditions drive pricing, so these numbers will shift — but the mechanics stay the same.
How It Works
This note has two paths depending on what happens at the end of year one.
At the one-year mark, the bank checks whether all of the underlying indices are positive. If they are — even by 1% — the note gets called. You get your full principal back plus a 20% premium. Done. A 1% market gain produced a 20% return.
If any underlier is down at the one-year mark, the note doesn't call. It continues for the remaining term. At maturity, if the worst-performing index is up, you get 3× that return with no cap. If the worst performer is up 10%, you get 30%. If it's up 20%, you get 60%.
The barrier only matters at maturity. It doesn't matter what happens during the term — the market could drop 30% in year two and recover by year five and your principal is fine. The only scenario where your principal is at risk is if the worst-performing index is still down more than 20% at the very end.
What's the Trade-Off
"You're amplifying gains in exchange for capping your year-one return and committing your capital for up to five years."
What you give up
If the market rallies 40% in year one, you still get 20%. If the note runs to maturity and the market is up 50%, you get 3× the worst performer — which may be less. You're also committing capital for up to five years with no ability to access it early on your own timeline.
What you get
Amplified returns in either scenario. A small gain in year one becomes a 20% return. A moderate gain at maturity gets tripled. And the barrier is only observed at the very end — so short-term volatility during the term doesn't put your principal at risk.
What Can Go Wrong
The worst performer is down more than 20% at maturity.
This is the real risk. If the note doesn't call in year one and the worst-performing index is still down more than 20% when the note matures, your principal is linked to that index's performance. If it's down 35%, you get back roughly 65 cents on the dollar.
The note gets called at year one in a big rally.
If the market is up 40% and you got 20%, you left money on the table. That's the cost of the amplified structure — you traded unlimited upside for a defined premium. You got a strong return, just not as strong as the market.
The multiplier works against you at maturity.
The 3× multiplier applies to the worst performer, not the best. If the S&P is up 25% but another index is only up 3%, you get 3× the 3% — which is 9%. Still positive, but not what you might have expected looking at the broader market.
What Happens When the Note Ends
Called at year one
All indices are positive at the one-year observation date. You get your full principal back plus 20%. We reinvest into a new note.
Maturity — barrier intact
The note runs to maturity and the worst performer is above the barrier. If it's positive, you get 3× the return of the worst performer. If it's between 0% and −20%, you get your principal back with no gain.
Maturity — barrier breached
The worst-performing index is down more than 20% at maturity. Your principal is reduced based on that index's performance.
When This Makes Sense
You want growth exposure with amplified upside rather than income or premium.
You're comfortable with a 5-year commitment if the note doesn't call in year one.
You want downside protection that ignores short-term volatility — the barrier is only checked at the
very end.
You understand that your return is linked to the worst-performing index, not the best.
