The Adidas share was recently able to stabilize after a sharp price slide. Bonus certificates with a cap enable investors to generate high returns not only when the share price is stable, but also when the price falls significantly.
After its 12-month low on November 3, 2022 at EUR 93.40, the Adidas share entered an upward movement that peaked on February 3, 2023 at EUR 160. However, after the termination of the partnership with rapper Kanye West, which caused considerable damage to the sporting goods manufacturer, the upward trend came to an abrupt end. After a sharp drop in price, the share price recently settled in the area of 140 euros.
However, the voices of those experts who recommend buying the share at the current price level with price targets of up to 180 euros (Berenberg Bank) are already increasing.
The investment idea
Investors who want to use the recent price slide to invest in Adidas shares and at the same time want to reduce the price risk of direct share investments could consider investing in a bonus certificate with a cap as an alternative to direct share purchases.
Bonus certificates with a cap enable high yield opportunities not only when the Adidas share price rises, but also when prices move sideways or fall significantly. As a counter-trade for the attractive sideways opportunities, certificate investors have to forego the unlimited profit potential of the share investment and the dividend payments.
The way it works
If the Adidas share never touches or falls below the barrier of 100 euros by the valuation date of the certificate, then the bonus certificate with cap will be repaid on June 27, 2024 with the bonus amount of 140 euros.
The key data
The BNP Paribas bonus certificate with a cap (ISIN: DE000PE6QZ34) on the Adidas share has a bonus level and cap of EUR 140. The cap defines the maximum payout amount of the certificate. The barrier activated by the valuation date, June 21, 2024, is EUR 100. At the Adidas share price of EUR 143.10, investors were able to purchase the certificate for EUR 118.60. The certificate is therefore 17.12 percent cheaper than the share.
The chance
Since investors can currently buy the certificate with 118.60 euros, it enables a gross return of 18.04 percent in 15 months (equal to 14 percent per year) if the share price never falls by 30.12 percent to 100 euros or below by the valuation date falls.
The Risks
If the price of the Adidas share touches the barrier of EUR 100 by the valuation date and the share is listed below the cap on the valuation date, the certificate is redeemed at the closing price of the Adidas share fixed on the valuation date. If this is found to be below EUR 118.60, the purchase price of the certificate, then investors will suffer a loss.
This article does not constitute a recommendation to buy or sell Adidas shares or investment products based on Adidas shares. No liability is assumed for the correctness of the data.
