Tesla with 39% protection and 14% p.a. chance until the end of the year

Tesla with 39% protection and 14% p.a. chance until the end of the year

Anyone who invests in the highly volatile Tesla share (ISIN: US88160R1014) should have a good dose of risk tolerance and strong nerves. While the US electric car manufacturer’s stock was trading below $ 200 a year ago, it almost quintupled to $ 970 in February 2020. The corona crash then pushed the stock back down to $ 350. Subsequently, the Tesla share rose to its new all-time high of $ 1,027 by June 10, 20. After the price slump on June 11, 20, the Tesla share traded in the range of USD 980. Experts are by no means in agreement about the future course of the Tesla share.

The investment idea: Discount certificates could be interesting for risk-ready investors with the market assessment that the Tesla share will not come under massive pressure again by the end of 2020.

If you want to exchange the unlimited profit potential of direct equity investments and the prospective dividend payment for the chance of a sideways return, you can choose from a variety of suitable discount certificates.

How it works: If the Tesla share is quoted on or above the cap on the valuation day of the certificate, then the discount certificate with its maximum amount of USD 600, which is equivalent to the current EUR / USD exchange rate of USD 1,131, is equivalent to EUR 530.50 will be repaid.

The key data: The Morgan Stanley Discount Certificate (ISIN: DE000MC6G4X7) on the Tesla share is equipped with a cap at USD 600. The valuation date is December 18, 2018, and the certificate is paid back on December 28, 2018. At the Tesla share price of USD 980.70 and the aforementioned Euro / USD price, investors were able to acquire the certificate at EUR 494.22.

The opportunities: Since the certificate is currently available at 494.22 euros (= 558.96 USD), it will allow gross income of 7.34 percent (= 14 Percent per year), if the share price on the valuation day is not 38.82 percent lower than its current value. In contrast to bonus certificates, for discount certificates only the closing price relevant on the valuation day is important for the investment result. A yielding euro will have a positive impact on the investment result.

The risks: If the Tesla share is listed below the USD 600 cap on the valuation day, the certificate will be repaid at the closing price of the share determined on the valuation day. If the share is listed below the purchase price of the certificate, the investment will end in the red. A rise in the euro against the USD will have a negative impact on the investment result.

This article does not constitute a recommendation to buy or sell Tesla shares or investment products in Tesla shares. We assume no liability for the accuracy of the data.


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