Asana (NYSE: Assan) is a technology-focused company that addresses the project management space on multiple fronts.
Asana helps you manage projects, focus on what’s important, and organize your work in one place for seamless collaboration
what What’s also notable about Asana is that it’s a co-founder. Dustin Moskovitz, one of the first Meta (Facebook) co-founders. We have a proven track record of bringing technology companies to market from the early stages.Mr. Moskovitz bought I sold my stake in the company this year, even though the stock was collapsing. To date, he has purchased shares worth $350 million in him.
We can’t predict when the tech downturn will end or if Asana’s stock will double or triple from where it is now, but we can look at our current stock analysis. Stocks have shown very high implied volatility due to the sharp price declines this year. High implied volatility always indicates a rich premium for the options chain associated with that stock. Works for both calls and puts. That makes both instruments expensive.
This article puts forward a one-year cash cover put strategy that could yield over 30% if ASAN shares trade above $17.50 per share in January 2024. If ASAN continues to show weakness after a year. In our view, exploiting the implied volatility of equities is a very sensible way to take a position without needing the equity’s market time, a feat historically impossible.
Asana is down over 76% year-to-date:
The stock has more than doubled the decline in the Nasdaq index. On the long-term timeframe, the stock is currently below IPO levels.
At the top of the tech bubble, we can see how the stock offered a 400% return post-IPO. Prices are below original levels.
What is Trade?
We advocate a cash covered put writing strategy.
The table above details how Asana sells 10 contracts with a maturity date of January 2024. The premium received on the transaction is $6.1 per share, or $6,100 under our contract, with an annual yield of 30% if the stock goes above his $17.5 per share in January 2024. will be If the stock price continues to fall, this strategy offers a discount of 35% or more at the entry point.
Possible scenarios for the proposed trade are:
- ASAN Share Price Exceeds $17.5 Per Share In January 2024
- Option expires without being exercised
- The investor pays the full premium, or $6,100.
- Annual returns for investors exceed 30% on an exposure basis (requires cash to be secured for the transaction).
- ASAN Share Price Below $17.5 Per Share In January 2024
- option is exercised
- Investors will end up buying shares at $11.40 per share, or a discount of over 35% from current spot levels.
- Entry point is calculated as strike minus premium (17.5 – 6.1)
- Investors can sell for a profit depending on where ASAN is trading at the time (if ASAN is trading below $17.5 per share and above $11.4 per share) , the investor realizes a net capital gain).
The implied volatility is so high that the proposed trade yields very convincing results. The fact that co-founders are buying shares indicates that the company won’t go bankrupt, so the fall from the $17.5/share price point is pretty limited. The risk/reward ratio resulting from the 91% implied volatility priced on the 1-year options chain is very compelling.
Asana, co-founded by Dustin Moskovitz, is down more than 76% year-to-date. Returns of this sort were difficult to predict during the peak of the tech bubble, but investors aren’t sure if this is the bottom. Achieving the market’s timing is a near-impossible feat, but in a year’s time we will be talking about the size of rate cuts rather than rate hikes, and tech stocks will almost certainly be auctioned again. Moskovitz has shown confidence in his model of the company’s business by purchasing shares worth more than $350 million this year, even as his share price has fallen. Retail investors looking to buy stocks are advised to follow his Put His Writing Strategy, which offers a discount of 35% or more from his current spot level. Due to the extremely high implied volatility, the at-the-money-sold put option offers a yield of over 30% should the stock price exceed $17.50 per share in January 2024. The price at which the shares were ultimately purchased.