Infineon certificate with 45% protection and 8% chance

Infineon certificate with 45% protection and 8% chance

The shares of Infineon (DE0006231004), one of the global market leaders in the semiconductor and system solutions sector, were already under great pressure before the big sell-off of the past few days. On October 28, 2020, the remarkable decline in the Infineon share reached its temporary low at EUR 23.37. However, it should be noted that this price slide was preceded by a huge 26 percent price jump from EUR 22.46 to EUR 28.33 within the short period from September 25, 2020 to October 14, 2020.

Anyone who considers the fall in the price of the Infineon share, which is considered to be severely undervalued, as excessive and considers the current level to be a favorable time to invest in the share, could consider purchasing an investment certificate with a high safety buffer as an alternative to buying shares directly.

The investment idea: Investors who believe Infineon shares will stabilize, but who want to achieve a positive return even if the share price falls sharply, could consider investing in a bonus certificate with a cap. In contrast to a direct equity investment, bonus certificates provide opportunities for disproportionately high returns even when share prices are stagnating or falling. The certificate presented below will also ensure positive returns if the Infineon share slips up to 45 percent in the red by June 2020.

How it works: If the Infineon share never touches or falls below the barrier of EUR 13 by the valuation date of the certificate, the bonus certificate with cap will be repaid on June 24, 2021 at the bonus level of EUR 26.

The key data: For the BNP bonus certificate with a cap (ISIN: DE000PF2K1V1) on the Infineon share, the barrier is 13 euros. Bonus levels and the cap were attached at 20 euros. The cap defines the maximum payout amount for the certificate. The valuation date is June 18, 2021, and the certificate will be repaid on June 24, 2021. At the Infineon share price of 23.82 euros, investors could purchase the certificate for 24.11 euros.

The opportunities: Since investors can currently buy the certificate for EUR 24.11, it enables a gross return of 7.83 percent (= 13 percent per year) over the next eight months if the share price has never increased by 45.42 percent by the valuation date falls to 13 euros or less.

The risks: If the Infineon share touches the barrier at 13 euros by the valuation date and the share is listed below the cap on that day, the certificate will be repaid at the closing price of the Infineon share determined on June 18, 2021. However, in this case too, the cap limits the maximum payout amount to EUR 26.

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


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