Deutsche Börse discounter with 9% chance and 17% discount

Deutsche Börse discounter with 9% chance and 17% discount

The Deutsche Börse share (ISIN: DE0005810055) rose impressively and, above all, quickly from its long-term low on March 18, 2020 at EUR 92.92 to July 22, 2020, when the share reached its all-time high of EUR 170.15 set down towards the top. Although the brisk trading activity had a positive effect on the earnings figures of Deutsche Börse due to the increased uncertainty, the share price came under pressure due to fears that earnings growth could not be maintained at the rate of the previous months. Since its all-time high, the share has crumbled by 14 percent in the past three months to its current level of 144 euros.

The investment idea: Deutsche Börse could be one of those companies that could get through the crisis relatively unscathed. Anyone considering investing in Deutsche Börse shares and wanting to noticeably reduce the undoubted price risk associated with buying shares directly could consider investing in a discount certificate on Deutsche Börse shares. With discount certificates, investors can still achieve high returns for the next few months if the share continues to decline.

In the case of discount certificates, in contrast to bonus certificates, only the closing price relevant on the valuation day is of importance for the investment result and not the price development of the share during the term of the certificate. This is why risk-averse investors tend to rely on discount certificates rather than bonus certificates in such volatile times as they are now.

How it works: If the Deutsche Börse share is listed at or above the cap on the certificate’s valuation day, which defines the certificate’s highest payout amount, the discount certificate will be repaid at its maximum amount of 130 euros.

The key data: The J.P. Morgan Discount Certificate (ISIN: DE000JM5FK98) on Deutsche Börse shares has a cap of 130 euros. The valuation date is December 17, 2021, and the certificate will be repaid on December 24, 2021. At the Deutsche Börse share price of EUR 144.03, investors could buy the certificate for EUR 119.37. The certificate is 17.12 percent cheaper than the share.

The opportunities: Since investors can currently purchase the certificate for EUR 119.37, it enables a gross return of 8.91 percent over the next 14 months if the share price is at or above the cap of EUR 130 on the valuation day.

The risks: If the Deutsche Börse share is listed below the cap of EUR 130 on the valuation day, the certificate will be repaid at the closing price of the share determined on the valuation day. If the share price is below the purchase price of the certificate, i.e. below 119.37 euros, the certificate investment will cause a loss – before expenses.

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


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