The Lufthansa share has increased by 44 percent since October 2022. With bonus certificates with a cap, investors can achieve high returns even if the stock gives up a large part of its recent price gains.
The German Lufthansa share rose from October 3, 2022, when it was trading at EUR 5.52, to EUR 9.89 in early February, marking its highest level in three years. The share price subsequently corrected to its current level of EUR 9.77.
Since the demand for air travel is high despite the economic problems, high inflation and uncertain energy supply and passenger numbers are now approaching the pre-corona level, experts from Barclays Capital reiterated their buy recommendation for the with a target price of EUR 14.80 Lufthansa share.
The investment idea
Even after the strong price gains of the past few months, now could still be a good time to invest in Lufthansa shares because of the positive company news. However, if you want to significantly reduce the undoubtedly existing price risk of direct share purchases and still want to achieve a return in the double-digit percentage range, you could consider purchasing a bonus certificate with a cap as an alternative to buying shares.
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 6.20 by the certificate's valuation date, the bonus certificate with cap will be repaid on December 22, 2023 with the maximum repayment amount of EUR 10.50.
The key data
The HVB bonus certificate with a cap on the Lufthansa share (ISIN: DE000HC2N553) has a bonus level and a cap of EUR 10.50. The cap defines the maximum payout amount of the certificate. The barrier activated by the valuation date, December 15, 2023, is EUR 6.20. At the Lufthansa share price of EUR 9.77, investors were able to purchase the certificate for EUR 9.37.
The chance
Since the certificate can currently be purchased at EUR 9.37, it enables a gross return of 12.06 percent (=15 percent per year) until December 2023 if the share price never falls by 36.54 percent to 6.20 by the valuation date euros or below.
The Risks
If the Lufthansa share price touches the barrier of EUR 6.20 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 9.37, 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.
