the cleanest sell-put setup on my list, with one gate that fails
ServiceNow is the one name where my gates are nearly all green, and a single date holds me back.
The business hasn't changed since my last review, but analysts have caught up. Stifel went to $160 from $120, UBS to $150 from $110, Argus to $170 from $134, and RBC to $176 from $130, all within a week. Consensus is $149.93, about 7.6% above the $138.61 close on 13 Oct.
The numbers behind that are solid. Q2 subscription revenue was $3,877M, up 24.5%. Current remaining performance obligations (cRPO) were $13.20B, up 21%, and total contracted backlog is $29.0B. Trailing free cash flow is $4.57B, a 31% margin.
The stock is 32.7% below Stock Oracle's fair value of $205.92 and down about 22% over twelve months, while subscription revenue grew about 23%. That gap reflects one open question: do AI agents shrink seat-based software, or does ServiceNow become the platform that runs them? Non-GAAP margin is 29.5%, but GAAP operating margin was only 4% in Q2, because stock comp runs at 16.4% of revenue. Q3 results are on 28 Oct, confirmed by the company. I'll read cRPO first. Guidance is 19.5%, and anything under 18% brings the AI worry straight back.
My scorecard gives it 73/100, third of eighteen.
My sell-put gates:
200-day SMA ($115.20): pass, spot is 20.3% above.
Zone: Full Green, 4.0% above a rising 50-day of $133.29.
IVR 60.8, IVP 71.4: pass. The print inflates both.
Sizing: pass. A $120 strike needs $12,000, so two contracts fit my cap.
Earnings: fail. The confirmed 28 Oct print comes before the 20 Nov expiry.
The window for the 18 Dec monthly opens 3–18 Nov, with a strike zone of $115–120. At 45% IV the $120 put has a delta of 0.15, right at my floor. At 40% it's 0.13, below. Assigned there, my net cost is about $118, roughly 43% below fair value, so I'd be happy owning it at that price. The risk is that implied volatility drops after the print, which would push the strike under my delta floor.
So it's no trade today. I re-run every gate live on 3 Nov.
Personal framework, not investment advice.
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- JessieTheresa·10-15 09:32I am not sold on the immunity angle here. If AI agents compress seat growth, 31% FCF margin will not save this multipleLikeReport