21 percent protection: T-share with eight percent chance


If you consider investing in the Deutsche Telekom share after the quarterly figures have been published, you could consider investing in bonus certificates with Cap as an alternative to purchasing shares.
Accompanied by strong price fluctuations, the Deutsche Telekom share price has tended to rise since the beginning of 2019. If the former popular share was trading below 14 euros in January, then it could recover to 16.25 euros by October. However, the share price came under pressure again afterwards.

Deutsche Telekom
Deutsche Telekom 15.44

Following the publication of the quarterly figures, in which stronger than expected sales figures were reported and earnings forecasts raised, the stock reacted to the 60 cent cut in dividend payments by a further 10 cents, with the price slipping by three percent. In a new analysis, UBS reiterated its buy recommendation for the T-share, which was considered cheap, with a price target of EUR 19.30.

Investment idea

Investors with the market assessment that the downside potential of the Deutsche Telekom share should not be too high in the next few months could consider investing in bonus certificates with Cap instead of buying a direct share.

Irrespective of dividend payments, the direct purchase of the Deutsche Telekom share will provide positive returns only if the share price rises. With Bonus Certificates with and without a cap investors can achieve satisfactory annual returns not only when the share price rises, but also when prices are stagnant or falling.

The functioning

If the Deutsche Telekom share price never touches or falls below the barrier at EUR 12 until the valuation date of the certificate, the bonus certificate with cap will be repaid on December 28, 20, with the maximum amount of EUR 17.

The key data

For the Commerzbank Bonus Certificate with Cap (ISIN: DE000CU085J5) on the Deutsche Telekom share, the bonus level and cap are € 17. The cap defines the maximum payout amount of the certificate. The barrier activated until the valuation day, 18.12.20, is 12 euros. With the German Telekom share price of 15,24 euro investors could buy the certificate with 15,72 euro.

The chance

Since the certificate is currently priced at € 15.72, it will provide gross income of 8.14 percent in 13 months if the share price never falls by 21.26 percent to $ 12 or below until the valuation date.

The risks

If the price of Deutsche Telekom shares touches the barrier at EUR 12 until the valuation date and the share trades below the cap on the valuation date, then the certificate is repaid at the closing price of the Deutsche Telekom share as of 18.12.20. If the share trades below € 15.72 after the barrier is touched on the valuation date, then the Certificates investment will cause a loss.

This article does not constitute a recommendation for the purchase or sale of Deutsche Telekom shares or investment products on Deutsche Telekom shares. No liability is accepted for the accuracy of the data.

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