Big data analytics company Palantir Technologies (PLTR) has had a strong year, with shares up 180%. One trader sees shares trending higher in the coming weeks.
That’s based on the May 17 $26.50 calls. The trade has 21 days until expiration, and 7,619 contracts just traded compared to a prior open interest of 147, for a 52-fold rise in volume on the trade. The buyer of the calls paid $0.40 to make the bullish bet.
Palantir shares just traded for about $21.00, meaning the stock would need to rise $5.50, or a massive 26%, for the options to move in-the-money.
Since mid-March, shares have been trending lower from their 52-week high of $27.50.
Palantir has had a strong year operationally, with earnings up 202% and revenues rising by nearly 20%. The profit margin is a little low for a data company at just under 10%, but further earnings improvements could drive profitability higher.
Action to take: Investors may like shares now that they’ve pulled back to the low $20 range, with an eye towards further growth in the years ahead.
For traders, the May $26.50 calls are aggressive given how little time they have left before expiration.
Traders may want to look to make a quick mid-double-digit return on the option and then use the proceeds to make a trade with more time to play out.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.