#2 Palantir (PLTR)(US)

9 thg 1, 2023

This trade is what we would categorize as a counter-macro trade.

While the fundamentals of Palantir somewhat improved after November's earnings (Palantir raised guidance), the Macro backdrop is still unfavorable for high-growth Tech Counters.
Still, that does not mean we cannot take advantage of the pocket period of irrational rallies by picking counters that are staged to rally once the macro is favorable.

Palantir reaffirmed positive adjusted operating income for fiscal 4Q2022. This is new for Palantir as it has not posted a positive operating EPS since its IPO.

If you have overwhelming short positions, it may be safer to hedge your portfolio with a Palantir long as we go into a highly volatile week (CPI).
It is in our trading framework mandate to achieve a market-neutral position with a Long/Short portfolio.
Palantir has extremely high beta and volatility. One long position on Palantir should be able to hedge out two short positions

While there is a trade structure for stocks with the stop loss and profit level, we will be taking a Calendar Spread approach for this trade.


Buy Call
Expiry 19 May 2023, Strike 7.00
Options Price $0.77


Sell Call
Expiry 20 Jan 2023, Strike 7.00
Options Price $0.08


This is a simple Calendar spread. We expect Palantir to remain below $7.00 by 20 Jan 2022. There is no catalyst during this time frame except for CPI coming this Thursday. The sell call premium will reduce your overall trade cost by about 10% (0.08/0.77).
Palantir earning is on 01 Feb 2022. If Palantir's result on 01 Feb 2022 is not spectacular and the price remains suppressed, we will sell the 17 Feb 2023 Call Strike 7.00. It will reduce our buy call price even further. We will repeat this process until Palantir rallies or our buy call expires worthless.
If our buy call expires worthless, the premium from the call we sell every month will be more than enough to break even on the money we lose on the buy call.

The calendar Spread reduces our risk significantly if the stock does not rally. If the stock does rally, we will still be able to capture the upside profit.

This provides a HUGE advantage over trading the stock.

The risk with this strategy is that we should stop selling calls if the price action and Macro start to look bullish. If not, the loss on the sell side may eat up the profit on the buy side. This is not a zero-risk strategy; you must still have a directional deposition and proper market situation assessment. Your trade will suffer if you blindly sell calls when the market is clearly showing a bullish trend (macro + fundamental).

21 thg 1, 2023

Ghi chú

This update is for Option holders only. Stock holder, continue to hold.

For the option holders, your Sell Call at strike 7.00 would have expired by now, netting you some profit.
You Buy Call at strike 7.00 is still active as it expires on 19 May 23. This Buy Call should be in profit as well, however, DO NOT sell this. It is to buffer your other short trade or YOLO put options in case the market does a crazy rally.

However, we will continue adding another Sell Call to the Long Call that we are already holding.

Sell Call Option Palantir Strike 8.00
Expiry 17 Feb 2023, Price 0.18

We will be Selling (Shorting) this Call Option. Make sure you short the same contract amount as your Long Call. As long as Palantir does not go above 8.00 by 17 Feb 2023, we will add $180 ($0.18 * 100) per contract to our total Palantir profit. And if Palantir rally above $8.00, the Long Call that we are holding will be massively in profit.