What is an autocallable, and how does it generate income?

An autocallable is a type of structured investment that pays income as long as a reference stock stays above a predefined level, called a coupon barrier. If the stock is above the barrier on an observation date, the coupon is paid. If it is not, the coupon is skipped for that period. The note can also be called early if the stock rises above its initial level, returning capital so it can be redeployed. All of the autocallables that ARKY purchases includes a memory feature: if a coupon is missed, it is not lost permanently. If the stock recovers above the barrier, any missed coupons are paid in full.