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Registration Statement No.333-264388
Filed Pursuant to Rule 433
Subject to Completion,
dated September 16, 2022
Pricing Supplement to the Prospectus dated May 26, 2022,
the Prospectus Supplement dated May 26, 2022 and the Product Supplement dated July 22, 2022
US$ [ ]
Senior Medium-Term Notes, Series I
Barrier Enhanced Return Notes due October 12, 2023
Linked to the S&P 500® Index
· | The notes are designed for investors who are seeking 200.00% leveraged positive return based on any appreciation in the level of the S&P 500® Index (the “Reference Asset”) , subject to the Maximum Redemption Amount (as defined below). Investors must be willing to accept that the payment at maturity will not exceed the Maximum Redemption Amount. |
· | The Maximum Redemption Amount is $1,154.00 for each $1,000 in principal amount (a 15.40% return on the notes). |
· | If the Reference Asset decreases by more than 30.00% from its Initial Level, investors will lose 1% of the principal amount for each 1% decrease in the level of the Reference Asset from its Initial Level to its Final Level. In such a case, you will receive a cash amount at maturity that is less than the principal amount, and may lose up to 100% of your principal amount at maturity. |
· | Investing in the notes is not equivalent to a hypothetical direct investment in the Reference Asset. |
· | The notes do not bear interest. The notes will not be listed on any securities exchange. |
· | All payments on the notes are subject to the credit risk of Bank of Montreal. |
· | The notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000. |
· | The CUSIP number of the notes is 06374V6C5. |
· | Our subsidiary, BMO Capital Markets Corp. (“BMOCM”), is the agent for this offering. See “Supplemental Plan of Distribution (Conflicts of Interest)” below. |
· | The notes will not be subject to conversion into our common shares or the common shares of any of our affiliates under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act (the “CDIC Act”). |
Terms of the Notes:1
Pricing Date: | September 30, 2022 | Valuation Date: | October 06, 2023 | |
Settlement Date: | October 05, 2022 | Maturity Date: | October 12, 2023 |
1Expected. See “Key Terms of the Notes” below
for additional details.
Price to Public1 | Agent’s Commission1 | Proceeds to Bank of Montreal1 | |
Per Note Total |
100% [ ] |
0.40% [ ] |
99.60% [ ] |
1 The total “Agent’s Commission” and “Proceeds
to Bank of Montreal” to be specified above will reflect the aggregate amounts at the time Bank of Montreal establishes its hedge
positions on or prior to the Pricing Date, which may be variable and fluctuate depending on market conditions at such times. Certain dealers
who purchased the notes for sale to certain fee-based advisory accounts may forego some or all of their selling concessions, fees or commissions.
The public offering price for investors purchasing the notes in these accounts may be between $996.00 and $1,000 per $1,000 in principal
amount. We or one of our affiliates may also pay a referral fee to certain dealers in connection with the distribution of the notes.
Investing in the notes involves risks, including
those described in the “Selected Risk Considerations” section beginning on page P-5 hereof, the “Additional Risk Factors
Relating to the Notes” section beginning on page PS-5 of the product supplement, and the “Risk Factors” section beginning
on page S-1 of the prospectus supplement and on page 8 of the prospectus.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these notes or passed upon the accuracy of this document, the product
supplement, the prospectus supplement or the prospectus. Any representation to the contrary is a criminal offense. The notes will be our
unsecured obligations and will not be savings accounts or deposits that are insured by the United States Federal Deposit Insurance Corporation,
the Deposit Insurance Fund, the Canada Deposit Insurance Corporation or any other governmental agency or instrumentality or other entity.
On the date hereof, based on the terms set forth
above, the estimated initial value of the notes is $979.00 per $1,000 in principal amount. The estimated initial value of the notes on
the Pricing Date may differ from this value but will not be less than $930.00 per $1,000 in principal amount. However, as discussed in
more detail below, the actual value of the notes at any time will reflect many factors and cannot be predicted with accuracy.
BMO CAPITAL MARKETS
Key Terms of the Notes:
Reference Asset: | The S&P 500® Index (ticker symbol “SPX”) . See “The Reference Asset” below for additional information. |
Payment at Maturity: |
If the Final Level of the Reference Asset is greater than its Initial
If the Final Level of the Reference Asset is greater than its Initial
$1,000 + [$1,000 x (Percentage Change of the Reference
If the Final Level of the Reference Asset is less than its Initial Level,
If the Final Level of the Reference Asset is less than its Barrier Level,
$1,000 + ($1,000 x Percentage Change of the Reference
In this case, investors will lose 1% of their principal for |
Upside Leverage Factor: | 200.00% |
Maximum Return: | 15.40% |
Maximum Redemption Amount: | The payment at maturity will not exceed the Maximum Redemption Amount of $1,154.00 per $1,000 in principal amount of the notes. |
Percentage Change: |
The quotient, expressed as a percentage, of the following formula:
(Final Level – Initial Level) |
Initial Level:2 | The closing level of the Reference Asset on the Pricing Date. |
Barrier Level:2 | 70.00% of the Initial Level. |
Final Level: | The closing level of the Reference Asset on the Valuation Date. |
Pricing Date:1 | September 30, 2022 |
Settlement Date:1 | October 05, 2022 |
Valuation Date:1 | October 06, 2023 |
Maturity Date:1 | October 12, 2023 |
Calculation Agent: | BMOCM |
Selling Agent: | BMOCM |
1 Expected and subject to the occurrence of a market disruption
event, as described in the accompanying product supplement. If we make any change to the expected Pricing Date and Settlement Date, the
Valuation Date and Maturity Date will be changed so that the stated term of the notes remains approximately the same.
2As determined by the calculation agent and subject to adjustment
in certain circumstances. See “General Terms of the Notes — Adjustments to a Reference Asset that Is an Index” in the
product supplement for additional information.
Payoff Example
The following table shows the hypothetical payout
profile of an investment in the notes based on various hypothetical Final Levels (and the corresponding Percentage Change) of the Reference
Asset, reflecting the 200.00% Upside Leverage Factor, Maximum Return of 15.40%, and Barrier Level of 70.00% of the Initial Level. Please
see “Examples of the Hypothetical Payment at Maturity for a $1,000 Investment in the Notes” below for more detailed examples.
Hypothetical Percentage Change
|
Participation in Percentage
|
Hypothetical Return of the
|
10.20%
7.70%
|
200% Upside Exposure, subject to the Maximum
|
15.40%
15.40%
|
6.00%
3.00%
|
200% Upside Exposure
|
12.00%
6.00%
|
0%
-30%
|
Barrier Level of 70% of Initial Level
|
0%
0%
|
-40%
-50%
|
1x Loss Beyond Barrier Level
|
-40%
-50%
|
Additional Terms of the Notes
You should read this document together with the
product supplement dated July 22, 2022, the prospectus supplement dated May 26, 2022 and the prospectus dated May 26, 2022. This document,
together with the documents listed below, contains the terms of the notes and supersedes all other prior or contemporaneous oral statements
as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for
implementation, sample structures, fact sheets, brochures or other educational materials of ours or the agent. You should carefully
consider, among other things, the matters set forth in Additional Risk Factors Relating to the Notes in the product supplement, as the
notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and
other advisers before you invest in the notes.
You may access these documents on the SEC website
at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):
Product supplement dated July 22, 2022:
Read More: Form FWP BANK OF MONTREAL /CAN/ Filed by: BANK OF MONTREAL /CAN/