The Big 3: MU, NOW, CAR
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The Schwab Network's 'Big Three' segment delivers a high-stakes trading analysis on three stocks pushed to extremes: Micron, ServiceNow, and Avis Budget Group. Tim Bigham, options strategist, argues that Micron’s 70% year-to-date rally has become overextended, prompting a cautious 'non-further bullish' stance with a May 550-560 call spread to capitalize on high implied volatility. ServiceNow, despite beating earnings for four quarters in a row, has plunged 40% year-to-date and 16% in a single day after disappointing guidance, creating a 'lemonade from lemons' opportunity with a low-cost call vertical. Most strikingly, Avis Budget Group—after a historic short squeeze that nearly quintupled its value—has collapsed from $800+ to below $400, leaving behind a massive implied volatility spike. Bigham recommends selling long-dated strangles on CAR, betting on IV collapse, with a potential 200%+ return on a trade that requires no downside exposure. The episode underscores a recurring theme: markets reward contrarian positioning when sentiment is at extremes, especially when technicals and volatility diverge from fundamentals.
Sell Micron May 550-560 call spreads to capture high IV with 25% return on risk and 70-point upside cushion
Buy ServiceNow 90/100 call verticals at $2.50 cost for low-risk, high-reward trade as stock is overdone to the downside
Sell Avis Budget Group December 2027 strangles with $100 put and $1140 calls to profit from collapsing implied volatility
Watch for a 'bull trap' in CAR if price briefly rebounds above $429 without breaking prior highs
Use volume profile nodes at 400–430 (Micron), 98–109 (ServiceNow), and 160 (CAR) as key support/resistance zones
…and 3 more takeaways available in PodZeus
Introduction to the Big Three
Host Marley welcomes Tim Bigham, options strategist, and Rick Ducat to discuss three stocks at extreme market positions—Micron, ServiceNow, and Avis Budget Group—each overdone in a different direction.
Micron: Overbought Rally and Call Spread Strategy
“I'm just going out giving myself a little bit of time staying in front of earnings which come in the middle of June selling the traditional May call spread. IV is still high here on this name so taking advantage of that and collecting you know a nice premium because of that high IV so looking to sell the 550-560 May calls.”
Technical Analysis of Micron: Overbought Signals and Support Levels
Rick Ducat analyzes Micron’s chart, noting a broken trend line, RSI interruption, and key support at 455–460. Volume profile highlights 400–430 as a heavy trading zone, suggesting potential downside risk.
ServiceNow: 'Lemons to Lemonade' Trade After Earnings Collapse
“I think it's so bad, it's almost looking good. Maybe the lemon shirt I'm wearing, we can try to make lemons out of the, you know, or lemonade out of the lemons that ServiceNow has become here.”
Avis Budget Group: Post-Short Squeeze IV Collapse Play
“I'm just selling strangles to capture that IV look for, you know, car to remain even somewhat well behaved selling the December of 2027 going out in time because the vol is even richer out there selling the $100 put, which believe it or not is trading higher now than at the beginning of the month when the stock was 150 points lower and then selling as far out of the money calls as possible.”
“I'm just selling strangles to capture that IV look for, you know, car to remain even somewhat well behaved selling the December of 2027 going out in time because the vol is even richer out there selling the $100 put, which believe it or not is trading higher now than at the beginning of the month when the stock was 150 points lower and then selling as far out of the money calls as possible.”
“I think it's so bad, it's almost looking good. Maybe the lemon shirt I'm wearing, we can try to make lemons out of the, you know, or lemonade out of the lemons that ServiceNow has become here.”
“I'm just going out giving myself a little bit of time staying in front of earnings which come in the middle of June selling the traditional May call spread. IV is still high here on this name so taking advantage of that and collecting you know a nice premium because of that high IV so looking to sell the 550 -560 May”
Host
Guest
Micron
organization
ServiceNow
organization
Tim Bigham
person
Avis Budget Group
organization
Rick Ducat
person
May call spread
other
SMH
other
December 2027 strangles
other
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