BMW bonus certificate with 6% chance and 33% safety buffer

BMW bonus certificate with 6% chance and 33% safety buffer

The optimistic statements made by BMW management at the end of September 2020 about future business development in China spurred the price of the BMW share (ISIN: DE0005190003). Within the short period from September 25, 2020 to October 7, 2020, the share rose by eleven percent from EUR 59.06 to EUR 65.74.

In particular, the quarterly figures published on October 7th convinced investors. In the third quarter the group achieved an increase in sales of 8.60 percent compared to the third quarter of the previous year. The company regards the rapidly increasing demand for electrified vehicles as a substantial growth driver.

The investment idea: Investors who want to achieve a return in the region of six percent with the help of BMW shares in the next few months could consider investing in bonus certificates with a cap. With such certificates, investors can generate positive returns not only when the BMW share price rises, but also when it stagnates or falls. As a counter-transaction for the chance of the “sideways return”, certificate investors forego the unlimited profit potential of direct share purchases and the prospect of dividend payments. The certificate presented below will also yield a respectable profit if the BMW share slips 33 percent into the red within the next eleven months.

How it works: If the BMW share never touches or falls below the barrier of 44 euros by the valuation date of the certificate, the bonus certificate with cap will be repaid on September 24, 2021 at the bonus level of 57 euros.

The key data: For the UBS bonus certificate with a cap (ISIN: DE000UD8PHM1) on BMW shares, the barrier is 44 euros. Bonus level and cap were attached at 57 euros. The cap defines the maximum payout amount for the certificate. The valuation date is September 17, 2021, and the certificate will be repaid on September 24, 2021. At the BMW share price of EUR 65.70, investors could purchase the certificate for EUR 53.74.

The opportunities: Since investors can currently buy the certificate for EUR 53.74, it will enable a gross return of 6.07 percent over the next eleven months if the share price never falls by 33.03 percent to EUR 44 or below by the valuation date.

The risks: If the BMW share touches the barrier of 44 euros by the valuation date and the share is listed below the cap on that day, the certificate will be issued at the closing price of the BMW share determined on September 17, 2021, with a maximum of 57 euros, repaid.

This article does not constitute a recommendation to buy or sell BMW shares or investment products on BMW shares. No liability is assumed for the accuracy of the data.


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