Buy Palantir Stocks for Less With These 2 Unusually Active Put Options
The Palantir’s (PLTR) options volume for Wednesday was 866.998, nearly double its 30-day average. Of these options, 22 put as well as 34 call options were the most active—that is, a ratio of Vol/OI of 1.24 or greater and expiring within one week or more.
The put/call volume as well as the put/call open interest were positive with 0.52, 0.79, and 0.79, respectively. This is not surprising considering how well-liked Palantir shares are with investors. Share volume totaled 86.4 million, nearly eight million above the 30-day average.
Analysts don’t seem to be as in love with Palantir as investors are. According to Barchart information, out of the 15 analysts who cover the stock in detail, only two rate the stock as an investment worth buying (2.40 out of five) with a median price target of $25.87, which is well below the price at which it’s trading at the moment.
If you love Palantir but don’t wish to pay $43 to own its shares, trading any of these options with strike prices that are in the $30s may be your way to a higher income and a lower starting price.
Why Not Sell the $39 Put?
Selling the put at $39, which expires in 16 days in October. 25, earns you an additional $31 in premium revenue. This is an annualized yield of 16.4 percent based on yesterday’s close price of $43.13. That’s quite attractive.
However, the cost of 100 Palantir shares if you were requested to buy the shares would be $38.69, 9 percent lower than the current price. Several times in 2024, the shares of the company have dropped by 15 percent or more. For instance, over the span of four days of trading, PLTR shares fell 18 percent in May.
Therefore, unless you think that any drop into the high $30s will be just a temporary event, you’re likely to cut the price too close.
What About the $24 Put?
The last time Palantir stock traded lower than $24 was on the 21st of June. Between March 31 and June 21, the shares were traded between $21 and $24. Thus, even though it is possible that PLTR shares could be trading lower than $24 by the 21st of March 2025, 163 calendar days away, the annualized yield of 2.4 percent is not enough to justify the almost six-month-long option play.
The three and the four strike prices are the ones you should focus on. They are priced under $40.
Which Is the Better Put to Sell?
Based on yesterday’s actions, it appears that investors would prefer the $33 put over the $34. The volume of the former reached 24228 2.05x, which is the current open interest in comparison to 1,267 1.44x that of the open rate. The annualized yield on the earlier is 8.0 percent, whereas the latter’s return is 10.1 percent, which is 210 basis points more.
Let’s take a look at those who are skeptics about PLTR shares and are looking to buy them. The $33 put begins earning money for buyers at $31.95 by the asking price of $1.05 as opposed to the $34 put, which is in the cash at $32.75.
As I’ve stated numerous times, even though I’ve published about the stock market for many years, I’m still a novice about options. Yet even my tiny brain is able to see that something’s happening here.
If you were a bear on Palantir stock, would you be hesitant to pay an additional 20 dollars per contract in order to be at the top of the market by 80 cents earlier? I doubt it.
This implies that a large portion of the demand was from investors selling them rather than purchasing them.
From my point of view, selling the put at $34 is a great way to earn a profit and could be the best way to get a start on owning Palantir to last for a long time.
Final Thoughts on Palantir
I’m bullish on Palantir stock. The CEO, Alex Karp, is a brilliant person who knows the potential of AI.
The month of July was when I recommended to you that December. 18/2026, a $32 call, was an excellent option for those who are searching for DTEs (days until expiration) that extend beyond the standard 365 days. With the DTE of 890 calendar days, it was an asking cost of $9.75. The current asking price at the moment I am writing this is $20.10, nearly triple what it was three months before.
“I remain confident about the future of Palantir, whether it is with or without Oracle. Collaboration is just the icing on this cake. Oracle continues to earn more revenues from its most valuable 20 customers, which is around $55 million per client, or $1.1 billion. The Oracle collaboration could help boost this figure up in 2024 and beyond.” I wrote on the 12th of July.
There’s no doubt that Palantir could be a $100 company in 2026 by the end of the year.
Therefore, the December. 18/2026 60 call currently has an asking price of $10.10, which is slightly higher than the $9.75 that was offered in the month of July. Based on the delta of 0.53768, it is possible to make a profit of doubling your investment by selling your call prior to December 2026, when the share price increases by $18.78 (44 percent).