Palantir (PLTR) looks expensive on a forward price-to-earnings basis compared to any other name in its sector. That matters less once you see where the stock has come from.
The long-term move
A three-year weekly chart shows PLTR trading near $30 three years ago. As of Friday's close it traded above $186 a share - a gain of over $530 across those three years. A spectacular run.
The past year
A one-year daily chart shows the recent highs and lows. Last November PLTR hit an all-time high above $207 a share. It then pulled back steadily through the summer. A death cross formed, where the 50-day moving average dropped below the 200-day. That marked the low, with the stock hitting over two-year lows near $106 a share.
The stock has since rallied hard. Earnings on August 3rd showed 93% revenue growth. The commercial side of the business grew over 150% year-over-year, the main driver of the move, while the government contract side still grew 90% year-over-year that quarter. That report sparked a parabolic move higher, up over 50% in August. On the day of this look PLTR pulled back below $184 a share as the broader market came under pressure, but it has now broken out above both the 50-day and 200-day simple moving averages. RSI momentum settled around 69, close to overbought, and set to ease back.
The trade idea
The call skew is fairly steep right now because of that parabolic August move with over 50% gains. If you think PLTR may stall, consolidate, pull back, or push a bit higher but stay below $190 a share, a neutral-to-bearish short call vertical fits.
The setup uses September 18th monthly options, which expire in about 18 days - roughly two and a half weeks in the position. Sell the 190 call and buy the 200 call against it to keep risk defined, since anything can happen in this stock. That makes a short $10-wide call vertical.
With the stock opening just below $184, you collect roughly a $3 credit. Best case is $300 per spread, with $700 in risk. The break-even sits at $193 to the upside, over 5% above the current share price, which gives a cushion and a better chance of success. There is about a 63% chance the 190 strike you sell finishes out of the money at expiration. The trade-off: collect three, risk seven, with break-even about five and a half percent above the current price.
In pre-market, PLTR shares were soft, down more than one and a half percent.
