Covestro Bonus Certificate with 8% chance and 36% safety buffer – columns

Covestro Bonus Certificate with 8% chance and 36% safety buffer

On March 16, 2020, the DAX-listed share of the manufacturer of innovative polymeric materials that are found in almost all areas of daily life, Covestro (ISIN: DE0006062144), recorded an all-time low at EUR 23.54. After that, the share was able to recover again to the region of EUR 47 in the following months.

Following the increase in the annual forecast and the reassessments of the majority of analysts, who rated Covestro shares with price targets of up to 65 euros (Goldman Sachs) as worth buying or at least worth holding, the price increase for Covestro shares accelerated again in the past few days clear. On December 9, 2020, the price rally reached its preliminary peak at 50.94 euros.

The investment idea: For investors who, due to the consistently optimistic expert opinions and a market environment that remains friendly, predict a reasonably stable price development in the next few months, investing in a bonus certificate with a cap could be interesting. In contrast to a direct equity investment, bonus certificates enable the chance of a disproportionately high return even if the share price stagnates or falls. The certificate presented below will also ensure positive returns if Covestro shares slide up to 36 percent in the red by the end of 2021.

How it works: If the Covestro share never touches or falls below the barrier of EUR 32 by the valuation date of the certificate, the bonus certificate with cap will be repaid on December 23, 2021 at the bonus level of EUR 52.

The key data: The BNP bonus certificate with cap (ISIN: DE000PF3F489) on Covestro shares has a barrier of 32 euros. The bonus level and cap were attached at 52 euros. The cap defines the maximum payout amount for the certificate. The valuation date is December 17, 2021, and the certificate will be repaid on December 23, 2021. At the Covestro share price of EUR 49.95, investors could purchase the certificate for EUR 48.12.

The opportunities: Since investors can currently buy the certificate for EUR 48.12, it enables a gross return of 8.06 percent over the next twelve months if the share price never falls by 35.94 percent to EUR 32 or below by the valuation date.

The risks: If the Covestro share touches the barrier of EUR 32 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 Covestro share determined on December 17, 2021. If this is fixed below EUR 48.12, then the investment – before expenses – will cause a capital loss.

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


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