In line with the majority of financial stocks, the Commerzbank share has also recently been able to make strong gains. Bonus certificates with a cap offer investors attractive opportunities for returns even if the share price stagnates or falls.
Since the turnaround in interest rates, the majority of bank shares, as well as Commerzbank shares, have risen sharply. After the publication of the good business figures for 2022, the share of the DAX aspirant, which could be included in the DAX instead of the Linde share, increased its upward movement to up to 10.61 euros by February 1, 2023. The share then corrected to its current level of EUR 9.95.
Due to the bank's strong operational development, the experts from Warburg Research confirmed their buy recommendation for the Commerzbank share with a price target raised from EUR 10.70 to EUR 11.60.
The investment idea
In times of high inflation and historically still low interest rates, structured investment products in combination with solid underlyings offer an efficient way to counteract the effective loss of purchasing power. Anyone who sees the Commerzbank share as an underlying with limited downside potential could consider investing in a structured investment product, such as a capped bonus certificate, as an alternative to buying shares directly. Even if the share price falls sharply, these products enable annual gross returns in the double-digit percentage range.
Apart from dividend payments, the direct purchase of Commerzbank shares will only enable a positive return if the share price rises. With bonus certificates with and without a cap, investors can achieve disproportionately high returns not only when the share price rises, but also when prices are stagnating or falling.
The way it works
If the Commerzbank share never touches or falls below the barrier of EUR 6.50 by the certificate's valuation date, the bonus certificate with cap will be repaid on March 22, 2024 with the maximum repayment amount of EUR 12.40.
The key data
The Société Générale bonus certificate with a cap (ISIN: DE000SQ62070) on the Commerzbank share has a bonus level and a cap of EUR 12.40. The cap defines the maximum payout amount of the certificate. The barrier activated by the valuation date, March 15, 2024, is EUR 6.50. At the Commerzbank share price of EUR 9.95, investors could purchase the certificate for EUR 10.18.
The chance
Since the certificate can currently be purchased for EUR 10.18, it enables a gross return of 21.81 percent (=19.3 percent per year) until March 2024 if the share price never falls by 34.67 percent to 6 .50 euros or below.
The Risks
If the Commerzbank share touches the barrier of EUR 6.50 by the valuation date and the share is listed below the cap on the valuation date, investors will receive one Commerzbank share for each certificate in their custody account. If this share is sold below EUR 10.18, the purchase price of the certificate, then the investment will cause a capital loss.
This article does not constitute a recommendation to buy or sell Commerzbank shares or investment products based on Commerzbank shares. No liability is assumed for the correctness of the data.
