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Saturday 7 November 2020
Bayer shares have come under severe pressure since their high in June 2020. With bonus certificates with a cap, investors can achieve high returns in the coming months even as the share continues to decline.
Bayer shares are one of the few stocks currently trading well below the March 2020 low of EUR 44.85. If things were still going very well until June 2020, when the stock was able to recover up to 73.63 euros, from then on the stock was subjected to enormous pressure. Drastic savings and agricultural activity, which is severely affected by the Corona crisis, as well as the less optimistic future prospects were cited as reasons for the sharp drop in prices.
After another $ 1 billion loss in the third quarter of 2020 and the confirmation of reduced annual targets, Bayer stock plunged to a temporary low of € 39.91 on October 30. Although the quarterly result was weaker than expected, most analysts reiterated their recommendation to hold or buy Bayer shares.
The investment idea
Anyone wishing to earn a high return with the help of Bayer stock in the coming months, even if the stock falls well below the annual low of EUR 39.91, could consider investing in bonus certificates with a cap. Bonus certificates with a cap offer investors the advantage over buying shares directly to allow for high returns even when share prices are stagnant or falling. In return for the attractive side opportunities, certificate investors must forgo the unlimited profit potential of equity investing and dividend payments.
How does it work
If the Bayer share never reaches or falls below the EUR 28 barrier by the certificate valuation date, the Limit Bonus Certificate will be redeemed on September 23, 2021 with the bonus amount of EUR 42.
The key data
For the BNP certified bonus with a maximum limit (ISIN: DE000PF3F2H4) on Bayer shares, the level and limit of the bonus are 42 euros. The limit defines the maximum payment amount for the certificate. The barrier activated by the valuation date, 17 September 2021, is EUR 28. At a Bayer share price of EUR 43.71, investors could purchase the certificate for EUR 38.34. The purchase of the certificate is therefore associated with a significantly lower capital outlay than the purchase of the share.
The possibility
As investors can currently buy the certificate for € 38.34, it allows for a gross return of 9.55% in just under ten months if the share price never drops 35.94% to € 28 or less by the date. evaluation.
The risks
If the Bayer share price reaches the barrier of EUR 28 by the valuation date and the share is listed below the limit on the valuation date, the certificate will be redeemed at the closing price of the Bayer shares determined on 17 September 2021. If the Bayer share price falls below EUR 38.34 on that day, the investment in certificates will end in red.
This article does not constitute a recommendation to buy or sell Bayer shares or Bayer share-based investment products and assumes no responsibility for the accuracy of the data.
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