Bonus certificates: Securities with an airbagIf you are also wanting to earn money in sideways phases, you might like bonus certificates.
Three reasons for bonus certificates
- You also get the chance of a bonus payment in weaker stock market phases.
- For classic-style securities you also profit fully from rising prices for the underlying.
- What risk you shoulder is something you yourself decide – You have the choice from the staggered barrier levels.
Winners and losers
Bonus payment – even when the market goes sideway
How would that be? You back an equity or an index and still earn money if the prices don’t rise. That’s possible with bonus certificates that are counted as investment products. These have to key features: a bonus level upwards and a barrier downwards.
After buying a bonus certificate there are three scenarios:
- If the price of the underlying to which the bonus certificate refers does not reach the barrier during the entire duration you get paid the bonus level on maturity.
- If the price of the underlying exceeds the bonus level, as a rule you participate fully in the price rises and can thus garner additional earnings.
- If your market expectations prove wrong and the barrier gets hit or the price falls below it, your claim to the bonus expires. The bonus certificate then tracks the price trend for the underlying.
It is therefore clear why bonus certificates are among the products with a partial protection function: Since the barrier when the certificate is issued is as a rule well below the current price of the underlying, you have a risk cushion if costs stagnate or fall slightly.
Most frequent trades
Gear the barrier to your view of risk
Depending on how risk averse you are, Börse Stuttgart offers you a multiplicity of bonus certificates to choose from. The key here: The lower the differential between the current price of the underlying and the barrier, the more speculative the product. Incidentally, you can use bonus certificates on both rising or falling prices – in the latter case, the instruments are called so-called reverse bonus certificates.