Disclaimer: The trades discussed in this blog reflect the author's personal strategies and decisions. These are not financial advice and should not be considered recommendations to buy, sell, or hold any financial instruments. The author is not a licensed financial advisor. Options trading carries significant risk, and readers should perform their own research or consult a qualified financial advisor before making any investment decisions. Past performance does not guarantee future results.
New trade on ServiceNow (NOW): a bear call spread, 18 days out, with the short strike 17% above spot.
My idea is that I am not predicting a top. I am selling a call I believe will not be touched, and buying a further-out call so the worst case is a number I already know. Selling that call on its own would leave me with unlimited risk on the upside, and I am not willing to hold that into a stock this strong.
The Trade
Sell the 2026-09-18 $172 call, buy the 2026-09-18 $182 call. Stock at $146.75.
Here's the P/L profile:
Flat all the way up to $172, then a floor at $182 that doesn't move no matter what happens after. And this is the price chart:
The package quotes $0.37 bid / $0.53 mid. I plan on the bad side of that, so I use $0.29 credit and $971 max loss. Breakeven $172.29. Return on risk 2.9%, roughly 59% annualised. Short delta is about 10, so the model gives me a 92% chance of keeping the credit.
IV rank is around 54, so options are more expensive than they have been for most of the year and I am on the right side of that. RSI is at 74 and price is pushing the upper Bollinger band, which tells me the move is stretched. And the next earnings are on 2026-10-28, after expiry, so there is no scheduled event inside the trade.
Mostly it is the buffer. NOW has to rally 17% in 18 days just to reach my strike, and 24% for me to lose the full $971. I think I'm ready to buying it back at around 65% of the credit. I don't try to squeeze the last cents. If it gets challenged, I roll out in time and further out of the money when the credit allows, instead of sitting and hoping.
If something breaks the thesis, a macro shock or sector news, I take the small profit or the small loss and leave. As always, the trade is logged in my trade log.
Update - Trade Closed
I timed it right and I was surely a bit lucky, but I'm happy to get an 80% of the total profit already and move on to the next trade:
Gianluca Longinotti is an experienced trader, advisor, and financial analyst with over a decade of professional experience in the banking sector, trading, and investment services.
Gianluca LonginottiFinance Writer - Traders Education