$NOW daily pick: sell Dec 18 $100 put (buy-side) after the record Q3 selloff

$NOW: I'm selling the Dec 18 $100 put on @ServiceNow after its worst day ever and getting paid to wait.

As of midday ($111.85):
Down 25% today and 42% off the high, just under the 200-day
Credit $3.15 for about 3.2% in 50 days (~23% annualized)
Breakeven $96.85, about 13% below today
About 23x 2027 EPS estimates

I think the selloff overshoots because Q3 revenue still grew 20.5% to $4.11B and they raised the AI contract target to $1.7B.

Getting paid $315 to maybe own ServiceNow under $97 is a trade I'd take all day.

Not financial advice

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Why a put and not shares? The EPS miss was tiny ($1.00 vs $1.02) but Q4 cRPO growth was guided to 18.5% and the market wants proof the AI spend pays off now. That could take a few quarters. I'd rather collect $315 and let it come to me under $100.

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Don't have $10,000 sitting in cash? Defined-risk version: sell the $100 put and buy the Dec 18 $95 put for about $1.14 credit. Max risk $386 and breakeven $98.86. You lose the full $386 if it's under $95 on Dec 18.

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Bear case: the "AI eats software" fear is real and the stock already hit $81.24 in April. If seat-based software keeps getting sold the 200-day won't hold and a retest of the April low is on the table. That's why the strike is 11% below today and not at the money.

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What I'd watch: the next report is expected around Jan 27 so this put expires before the print. They raised the full-year free cash flow margin target to 36% and the Street still has 61 Buys, 8 Holds and 1 Sell for what it's worth.

Sources: ServiceNow Q3 2026 results press release · CNBC: ServiceNow heads for worst day ever after Q3 · MarketWatch: ServiceNow on track for its largest drop on record · Investing.com: NOW sinks on EPS miss, 18.5% Q4 cRPO guide · Investing.com: NOW Q3 2026 earnings call transcript · Reuters: Software stocks slide as Fortinet, ServiceNow miss lofty expectations

Not financial advice. For informational and educational purposes only.