Option trade on Palantir

Palantir has not been immune from the market decline year to date, and shares currently trade just under $13 from a 52 week high of $29.29. Even though the share price is down 56% since September, there are positive catalysts for the company. 

The company has $2.5B in cash reserves, a high growth commercial business, rock-steady government contracts and they're investing in building a sales team across the US and Europe to accelerate sales of their two flagship products. The bottom is likely in for the company at $9.74/share, and we expect continued moves higher and the recent dip this month presents an opportunity to go long.

We are selling the January 2024 $10 Puts for $2.20 and buying the same expiration $15 Calls for $3.60, the net cost of the trade is $1.40. Should shares drop below $7.80 we'd be glad to purchase shares at that effective price from the short puts. The company would likely make a great acquisition target at that level for a major defense or government services company which further provides a floor on the stock price.

This trade has 646 days until expiration which gives us plenty of time to allow the stock to continue its recovery. Further, continued government spending on defense, intelligence and digital warfare should also help Palantir at they don't have competition in this segment of the market in helping governments and companies analyze large volumes of data to extract actionable intelligence.

For additional reading here are two views that also support the bullish case on PLTR:

Expect Massive Upside From Palantir Technologies Over the Next Year The broader market rally has helped Palantir Technologies (PLTR) stock gain 50% from its lows. PLTR’s growth story extends beyond today’s headline relief. Buy Palantir in front of the slow-to-act, sell-side. Source: Spyro the Dragon / Shutterstock.com A broader market bid led by technology stocks helped with an outsized performance in shares of big data analytics specialist Palantir Technologies (NASDAQ:PLTR) in Monday’s session. PLTR stock closed up nearly 6% compared to the Nasdaq’s gain of ar Yahoo

Buy Palantir Stock Because $20 Is Around the Corner, Says Analyst Russia’s invasion of Ukraine has highlighted how fragile democracy can be, and how important it is for the U.S. (and its allies) to cultivate a strong military. This also speaks to the need for significant investments in cutting-edge technologies and solutions. So says Monness analyst Brian White who also thinks Palantir's (PLTR) unique approach leaves it well-positioned to benefit from this necessity. “We believe the recent chaos initially ushered in by the pandemic, and now the situation in Uk Yahoo