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Posts Tagged ‘ServiceNow’

ServiceNow (NOW) Shows a Renewal of Upward Momentum After Breaking to an All-Time High

Monday, February 8th, 2021

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

ServiceNow pushed upward to a fresh all-time high in the past week. The following two articles outline some of the reasons that are driving the growth – ServiceNow: The Workflow Revolution Is Happening and ServiceNow delivers strong Q4 as it expands wallet share.

Technicals

The monthly candle for NOW in January hinted of a potential pullback but the recent surge to new highs indicates otherwise. The upward trend remains intact for this stock and the expectation is that dips will be bought over the near-term. A rising trendline that dates to May last year held the decline last month where a small consolidation took place showing that buyers are ready to step in on dips. Near-term support is seen at the December high of $566.75.  There is momentum behind the move in the past week which suggest the rally will continue although it would not be surprising to see brief period of sideways trading to work off overbought conditions on the smaller time frames.

NOW Chart February 2021

NOW Chart February 2021

If you agree there’s further upside ahead for NOW, consider this trade which relies on the stock remaining above $590 through the expiration in five weeks.

Buy To Open NOW 12MAR21 587.5 Puts (NOW210312P587.5)
Sell To Open NOW 12MAR21 590 Puts (NOW210312P590) for a credit of $1.38 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when NOW was trading near $590.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $136.70. This reduces your buying power by $250 and makes your investment $113.30 ($250 – $136.70).  If NOW closes at any price above $590 on March 12, both options will expire worthless, and your return on the spread would be 121% ($136.70 / $113.30), or 1380% annualized.

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates February 6, 2021

IBD Underlying Updates February 6, 2021

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

ServiceNow (NOW) Stock Breaks Out On Earnings Beat

Monday, February 3rd, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

ServiceNow stock advanced sharply higher in the past week after earnings came in better than expected. Here is what two analysts have to say about the recent earnings report – Service Now’s (NOW) Q4 Earnings Beat, Revenues Rise Y/Y and ServiceNow (NYSE:NOW) PT Raised to at Jefferies Financial Group.

Technicals

The earnings report in the past week has triggered a technical breakout in NOW which trades at all-time highs. The technical charts suggest the upward momentum will continue while the stock holds above the breakout point at $319. The upper bound of a rising trend channel is within proximity and this might trigger a near-term consolidation while an upward break of it would be indicative of rising upward momentum.

NOW Chart February 2020 upward momentum

NOW Chart February 2020

If you agree there’s further upside ahead for NOW, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.

Buy To Open NOW 13MAR20 330 Puts (NOW200213P330)
Sell To Open NOW 13MAR20 335 Puts (NOW200213P335) for a credit of $1.89 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NOW was trading near $338.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $187.70 and your broker would charge a $500 maintenance fee, making your investment $312.30 ($500 – $187.70).  If NOW closes at any price above $335 on March 13, both options would expire worthless, and your return on the spread would be 60% (562% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates February 2, 2020

IBD Underlying Updates February 2, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

ServiceNow (NOW) Eyes All-Time Highs

Monday, December 30th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

ServiceNow (NOW) is up 35% from its low two months ago and several analysts expect the stock to continue higher. Here are two of them – Is ServiceNow (NOW) Outperforming Other Computer and Technology Stocks This Year? and 3 Tech Stocks for Growth Investors to Buy for 2020.

Technicals

From a technical perspective, NOW recently scaled above a major horizontal level that resides near $275. This level first came into play in late April and has acted as resistance on multiple occasions. The bullish break signals strength. The next area of interest will tend to be the psychological $300 price point which held the stock lower earlier this year.

ServiceNow hits all-time highs December 2019

NOW Chart December 2019

If you agree there’s further upside ahead for NOW, consider this trade which is a bet that the stock will continue to advance over the next four weeks, or at least not decline very much.

Buy To Open NOW 24JAN20 282.5 Puts (NOW200124P282.5)
Sell To Open NOW 24JAN20 285 Puts (NOW200124P285) for a credit of $1.03 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NOW was trading near $287.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $101.70 and your broker would charge a $250 maintenance fee, making your investment $148.30 ($250 – $101.70).  If NOW closes at any price above $285 on January 24, both options would expire worthless, and your return on the spread would be 69% (1007% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates December 28, 2019

IBD Underlying Updates December 28, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

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I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins