55 percent protection: TUI with a 9 percent chance

An investment in the TUI share is still associated with considerable risk.

55 percent protection: TUI with a 9 percent chance

An investment in the TUI share is still associated with considerable risk. With bonus certificates with a cap, investors can achieve high returns over the next few months even if the share price loses more than half of its current value.

The tourism group TUI was undoubtedly one of the companies that suffered most from the effects of the Corona crisis. After two difficult years, the management of TUI expects a recovery in business development to the level of summer 2019 and a return to profitability soon due to the pent-up demand of those who love to travel after the relaxation of the corona restrictions.

When the group announced that it would carry out a capital increase in cash in order to repay state aid, the price of the TUI share fell by 14 percent from 2.89 euros to 2.53 euros on the closing price on 18 May 2022.

The investment idea

For investors who want to use the TUI share to achieve an annual gross yield in the double-digit percentage range over the next few months, even if the share falls below its historic lows from 2020, an investment in bonus certificates with a cap could be interesting.

Apart from dividend payments, private investors can only achieve positive returns when buying a share directly if the price rises. Compared to direct share purchases, bonus certificates with and without a cap offer investors opportunities for high returns not only when the share price rises, but also when the price stagnates or falls.

The way it works

If the TUI share never touches or falls below the barrier of EUR 1.10 by the valuation date of the certificate, then the bonus certificate will be repaid on December 23, 2022 with the bonus level of EUR 2.78.

The key data

The HSBC bonus certificate with a cap (ISIN: DE000HG1MDT1) on the TUI share has a bonus level and a cap of EUR 2.78. The cap defines the maximum repayment amount of the certificate. The barrier activated until the valuation date, December 16, 2022, is EUR 1.10. At the TUI share price of EUR 2.44, investors could buy the certificate for EUR 2.56.

The chance

Since the certificate is currently available for EUR 2.56, it enables a gross return of 9.20 percent (=14 percent per year) in six months if the share price has never fallen 54.91 percent to EUR 1.10 by the valuation date or falls below.

The Risks

If the TUI share touches the barrier of EUR 1.10 by the valuation date and the share is trading below the cap on the valuation date, the certificate will be redeemed at the TUI share closing price determined on 16 December 2022. If this is determined below EUR 2.56, then the certificate investment will cause a loss.

This article does not constitute a recommendation to buy or sell TUI shares or investment products based on TUI shares. No liability is assumed for the correctness of the data.


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