The Deutsche Bank share has been on a strong upward trend for months. With bonus certificates with a cap, investors can also generate high returns when the share moves sideways or falls.
After the sharp price slump in the first half of 2022, the Deutsche Bank share was able to recover from its 12-month low of July 15, 2022 at EUR 7.53 to its current level of around EUR 11.78. The bank's net interest income, which rose due to the interest rate hikes, was largely responsible for the rise in the share price. Since the beginning of the year alone, the share has increased by ten percent.
Due to the continued favorable valuation of financial stocks and the realistic chance of further significant growth in earnings, the experts at the analysis company Warburg Research reiterated their buy recommendation for Deutsche Bank shares with a price target of EUR 16.80.
The investment idea
Investors who are now considering an investment in Deutsche Bank shares, which are classified as slightly undervalued, and at the same time want to reduce the price risk of direct share investments, could consider purchasing a bonus certificate with a cap as an alternative to buying shares directly. With such products, investors can achieve returns in the double-digit percentage range over the next 14 months with a significantly reduced risk of loss.
Compared to direct share purchases, bonus certificates with a cap offer investors the advantage that they enable high returns even when share prices are stagnating or falling. As a counter-trade for the attractive sideways opportunities, certificate investors have to forego the unlimited profit potential of equity investments and prospective dividend payments.
The way it works
If the Deutsche Bank share never touches or falls below the barrier of EUR 7.50 by the valuation date of the certificate, then the bonus certificate with cap will be repaid on March 22, 2024 with the bonus level of EUR 13.50.
The key data
The DZ Bank bonus certificate with a cap on the Deutsche Bank share (ISIN: DE000DW806Q6) has a bonus level and cap of EUR 13.50. The cap defines the maximum payout amount of the certificate. The barrier activated by the valuation date, March 15, 2024, is EUR 7.50. With the Deutsche Bank share price of EUR 11.78, investors were able to buy the certificate for EUR 11.31.
The opportunities: Since investors can currently purchase the certificate for EUR 11.31, it enables a gross return of 19.36 percent (=16.30 percent per year) in 14 months if the share price has never fallen by 36.33 percent by the valuation date falls to EUR 7.50 or below.
The Risks
If the Deutsche Bank share touches the barrier of EUR 7.50 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 Deutsche Bank share determined on the valuation date. If this is fixed below EUR 11.31, then the certificate investment will cause a loss.
This article does not constitute a recommendation to buy or sell Deutsche Bank shares or investment products based on Deutsche Bank shares. No liability is assumed for the correctness of the data.
