Unusual Options Activity: Palantir Technologies (PLTR)

Big data firm Palantir Technologies (PLTR) has lost half its value from a speculative peak earlier in the year. One trader sees a rebound in the coming weeks.

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  • That’s based on the June 11 $24.50 calls. Expiring in 31 days, over 3,900 contracts traded against an open interest of 201, for a 19-fold rise in volume. With shares trading around $20 in recent sessions, the option would move in-the-money on a 20 percent move higher in shares.

    The buyer of the call paid about $0.45 to make the trade. Even with the slide in shares in the past few months, the company is up 111 percent since its IPO last year.

    The company reports earnings today, and shares will likely be volatile. Based on the company’s prior earnings reports since going public, the expectation is that revenues will likely beat expectations. However, there still remains some short-term uncertainty.

    Action to take: Shares look attractive here relative to the company’s earnings potential in the next few years. But this option trade is likely based on today’s earnings and shares being oversold in the short-term.

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  • The option makes sense, given its low cost. It could move in-the-money, given the stock’s daily volatility, which would likely lead to triple-digit returns. If the company continues to remain out of favor, however, the loss on the option is minimal.

     

    Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.