how do structured notes work 
a structured note is a complicated investment it is a derivative that brings together the features of different investments into one vehicle as such they track the performance of an underlying asset put simply it is a debt obligation with a derivative embedded into it there is some degree of flexibility that provides limited losses with limited gains but they provide investors with low levels of liquidity and can be hard to trade on the secondary market who invests in structured notes structured notes are considered complicated investments because of the intricacies involved since they involved both a debt obligation and a derivative it s important for investors to understand how these two elements work having said that investment banks typically create structured notes for more sophisticated investors like hedge funds and institutional investors can you lose money in a structured note that depends on the type of structured note certain notes offer some sort of principal protection if you invest in a note that doesn t have this protection you could lose some or all of your principal investment balance the bottom linethe investment world is full of different investments each of these comes with its own complexities risks and rewards structured notes may not be on the minds of average investors but it s still a good idea to understand how they work combining the features of two different types of investments into one structured notes allow traders to limit their losses albeit while they limit their gains but before diving in it s always a good idea to understand how they work and what risks may come with investing in them 