BMW certificate with 9% chance and 31% safety buffer – columns

BMW certificate with 9% chance and 31% safety buffer

In the wake of the tremendous upward movement of the stock markets in the past few months, the BMW share (ISIN: DE0005190003) also reached a new annual high on November 25, 2020 at EUR 77.31. After that, the share lost some of its vigor and began to move sideways within a range of EUR 70 to EUR 75.

The fact that the automotive group will reach the upper end of its own forecasts in terms of sales and profit and that the decline in vehicle demand due to the recent lockdown in Europe will at least be compensated by the strong demand from the Asian region should at least be the case for the share price given a sustained stable development of the overall market support.

The investment idea: Investing in a capped bonus certificate could be interesting for investors who want to take advantage of a reasonably stable price trend for BMW shares in order to achieve a return in the region of seven percent in one year. 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 the direct equity investment and the prospective dividend payments.

How it works: If the BMW share never touches or falls below the barrier of 50 euros by the valuation date of the certificate (the BMW share was last listed at this level in May 2020), then the bonus certificate with cap will be activated on December 24, 2021 paid back at the bonus level of 72 euros.

The key data: For the UBS bonus certificate with a cap (ISIN: DE000UE3ET05) on BMW shares, the barrier is 50 euros. Bonus level and cap were attached at 72 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 24, 2021. At the BMW share price of 72.27 euros, investors could purchase the certificate for 66.13 euros. The acquisition of the certificate is therefore associated with a significantly lower capital outlay than the direct equity investment.

The opportunities: Since investors can currently buy the certificate for EUR 66.13, it will enable gross income of 8.87 percent over the next twelve months if the share price never falls by 30.81 percent to EUR 50 or below by the valuation date.

The risks: If the BMW share touches the barrier at 50 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 December 17, 2021, with a maximum of 72 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 correctness of the data.


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