Just before they pupate, monarch larvae spin a silk mat from which they hang upside down by their last pair of prolegs. The silk comes from the spinneret on the bottom of the head. As it sheds its skin for the last time, the caterpillar stabs a stem into the silk pad to hang. This stem extends from its rear end and is called the cremaster.
While the process of complete metamorphosis looks like four very distinct stages, continuous changes actually occur within the larva. The wings and other adult organs develop from tiny clusters of cells already present in the larva, and by the time the larva pupates, the major changes to the adult form have already begun. During the pupal stage this transformation is completed. Many moth caterpillars (but not all) spin a silken cocoon to protect them as pupae. Butterflies do not do this, and their pupa stage is often called a chrysalis. While it is fine to refer to the previous stage as either larva or caterpillar, it is not correct to call a butterfly pupa a cocoon, since it does not have a silken covering.
Just before the monarchs emerge, their black, orange, and white wing patterns are visible through the pupa covering. This is not because the pupa becomes transparent; it is because the pigmentation on the scales only develops at the very end of the pupa stage. This stage of development lasts eight to fifteen days under normal summer conditions.
Upper left to bottom right: Monarch larva puapating (Photo: www.naturallycuriouswithmaryholland.wordpress.com)