After a post-corona high of over 13,400 points at the beginning of September, followed by a downward movement of a good 1,000 points, the DAX (DE0008469008) is currently trading at 13,100 points again. The US elections on November 3rd promise new impulses – anyone who has already invested and is thinking about hedging or who wants to opportunistically use the option of a reset could resort to a reverse bonus certificate. The most important parameter of the product type that benefits from a sideways movement: the barrier. If it is violated, the bonus function expires and the product is transformed into a short certificate – any premiums are lost.
DAX never above 14,400 points until mid-December
Anyone who assumes that the DAX will never gain more than 10 percent or over 14,400 points by mid-December (December 18, 2020) could rely on the DAX Reverse Bonus Certificate with Cap (ISIN DE000PX5A2B3) from BNP Paribas. The product is equipped with a reverse level of 27,000 and a bonus level and cap of 12,400 points. At the end of the term, investors receive the difference between the two price marks as the maximum amount, i.e. 14,600 points or 146 euros per certificate. With a purchase price of 143.68 euros, this corresponds to a return of 2.32 euros or 8.1 percent p.a. The buyer’s premium is 3.3 percent. If the barrier is breached, the repayment amount is calculated as the difference between the reverse level minus the closing index.
DAX never above 15,000 points until mid-March
Investors who want to invest with a longer horizon and therefore value a higher safety buffer, rely on the BNP Reverse Bonus Certificate with Cap (ISIN DE000PX84LA6) at 15 percent distance from the barrier, which is at 15,000 points. The certificate with the reverse level at 18,000 points pays a maximum amount of 50 euros (bonus level and cap 13,000 points), provided that the barrier is never touched by 19.3.21. This corresponds to a maximum return of EUR 2.97 or 14.1 percent p.a. Attractive: The product is currently listed with a discount of 4 percent.
CertificateReport Conclusion: Investors who expect a sideways or downward movement can benefit from the Reverse Bonus Certificates with a cap, as long as the barriers remain intact. If the market rises, the market assessments should be checked – possibly react with stop loss.
This article does not constitute a recommendation to buy or sell on the DAX or investment products on the DAX. No liability is assumed for the correctness of the data.
Author: Thorsten Welgen
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