In the last few weeks, the Lufthansa share has risen from the lows of March 2022. With bonus certificates with a cap, investors can achieve high returns even if the stock falls back to these lows.
Deutsche Lufthansa published consistently positive figures for the first quarter last week. Passenger volume in the first quarter of 2022 was 171 percent higher than in the first quarter of the previous year, reaching 57 percent of the pre-crisis level in 2019. The number of flights increased by 242 percent compared to the previous year.
Although restrictions are easing around the world, the oil price and the uncertain impact of the Ukraine war are now causing sector-specific volatility. Subject to the development of the Ukraine war, the company assumes that the capacity of the passenger airlines will again reach more than 70 percent of the pre-crisis level in the 2022 financial year.
The investment idea
Anyone considering an investment in Lufthansa shares in the currently interesting stock market situation could consider purchasing a bonus certificate with a cap as an alternative to buying shares. Bonus certificates significantly reduce the risk of buying shares directly and still allow returns in the double-digit percentage range.
Apart from dividend payments, the direct purchase of the Lufthansa share will only enable a positive return if the share price increases. 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 Lufthansa share never touches or falls below the barrier of EUR 5.00 by the valuation date of the certificate, then the bonus certificate with cap will be repaid on June 23, 2023 with the maximum repayment amount of EUR 7.25.
The key data
The HVB bonus certificate with a cap (ISIN: DE000HB6BS25) on the Lufthansa share has a bonus level and a cap of EUR 7.25. The cap defines the maximum payout amount of the certificate. The barrier activated by the valuation date, June 16, 2023, is EUR 5.00. At the Lufthansa share price of EUR 6.83, investors were able to purchase the certificate for EUR 5.97. The certificate is therefore significantly cheaper than the share.
Since the certificate can currently be purchased at EUR 5.97, it enables a gross return of 21.44 percent (=19 percent per year) until June 2023 if the share price has never fallen by 26.79 percent to EUR 5 or 5 by the valuation date falls below.
If the price of the Lufthansa share touches the barrier of EUR 5.00 by the valuation date and the share is listed below the cap on the valuation date, investors will receive one Lufthansa share for each certificate in their custody account. If this share is sold below EUR 5.97, 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 Lufthansa shares or investment products based on Lufthansa shares. No liability is assumed for the correctness of the data.