36 percent protection: RWE with a 22 percent probability

36 percent protection
RWE with a probability of 22%.

RWE stock is recommended as a buy by experts with high price targets due to the acquisition of a US solar company. With caped bonus certificates, investors can also achieve high returns if positive expectations are not fully met.

RWE’s € 6.8 billion acquisition of Con Edison Clean Energy Businesses will boost its green expansion in the United States, one of the fastest growing renewable energy markets. This positive company news and the complete elimination of coal already planned for 2030 has given RWE shares a significant boost in recent days in a favorable market environment.

RWE 39.09

If the positive expectations of most experts who hold the RWE share due to the acquisition of the US solar company, considered attractive with price targets up to 60 euros (JP Morgan Chase), then the share price should at least be well supported in the future.

The investment idea

Investors who believe the utility share will continue to rise due to the positive news situation may find it attractive to buy RWE stock, even at the current high level. 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 cap bonus certificate as an alternative to buying. of shares.

Aside from dividend payments, the direct purchase of RWE stock will only allow for a positive return if the share price rises. With bonus certificates with and without caps, investors can achieve disproportionately high returns not only when the share price rises, but also when prices are stagnant or falling.

The way it works

If the RWE stock never touches or falls below the € 25 barrier by the certificate valuation date, the bonus certificate with cap will be redeemed on December 22, 2023 with the maximum redemption amount of € 50.

The key data

The HVB bonus certificate with cap (ISIN: DE000HB7YJF4) on the RWE stock has a bonus level and a cap of 50 EUR. The limit defines the maximum payment amount for the certificate. The barrier activated up to the valuation date, 15 December 2023, is 25 euros. With the RWE share price of EUR 38.93, investors could purchase the certificate for EUR 41.12.

The possibility

Since the certificate can currently be purchased at EUR 41.12, it allows for a gross return of 21.60 percent (= 18 percent annually) until December 2023 if the share price never drops 35.78 percent to EUR 25. or drops below.

The risks

If the RWE share price reaches the EUR 25 barrier by the valuation day and the stock is listed below the cap on the valuation day, investors will receive an RWE share for each certificate in their custody. If this share is sold below EUR 41.12, the purchase price of the certificate, the investment will cause a loss of principal.

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

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