Palantir Technologies, Inc. (PLTR), Trending Stock Report

Palantir Technologies, Inc. (PLTR) is once again trending in the news and social media. Social media mentions are up 368% as the AI frenzy continues to drive PLTR shares higher. The 3-month implied volatility in the chart below shows that volatility expectations for the January expiration are relatively low.

That is especially interesting because PLTR is expected to announce earnings toward the end of this month or early November. All options that expire after the earnings announcement could be affected by the report. In just the last month, the share price of PLTR has gained more than 30% without an earnings report. That said, PLTR tends to make big moves around earnings. You can see the large gap moves last November, February, May and August. All of those gap moves occurred around earnings reports. This is an option buying opportunity.

This Volatility Term Structure chart for PLTR shows us the implied volatility for the at-the-money options for each expiration. This chart shows that options expiring November 8th & 15th, which are the first two expirations following the earnings release, have very high volatility expectations. On the other hand, volatility expectations for options expiring in January are relatively low. Investors using January options are likely underestimating the size of a potential move in PLTR shares between now and January 17^th options expiration.

This MDM graph compares the modeled expected distribution for future stock prices (the orange line) with the actual distribution of PLTR’s share prices over the past 2 years (the blue histogram). You can see that the actual stock movement shows that PLTR tends to make big moves much more frequently than January options prices expect. This tells us that PLTR options expiring on January 17^th are relatively cheap. This is an option buying situation.

This Volatility Cone chart for PLTR compares implied volatility expectations for each term to the historical volatility for that same term. The blue line shows the average historical volatility; the purple lines show each HV measure’s highest high and the lowest low over the past 2 years. You can see that the three-month term (which is the term we are interested in) is below the 2-year historical average. This confirms that options expiring on January 17^th are relatively inexpensive.

PLTR is once again trending in news and social media. PLTR has been good to us in the past. Investors are beginning to anticipate the potential for a big move in PLTR shares around an upcoming earnings report. Option volumes are higher in the November 15^th expiration, suggesting that investors anticipate a potential large move around earnings using shorter-term options.

By going out to January 17^th, we can benefit from the potential of a big move around the earnings report, and we get a lot more time to let our potential profits run at a better relative price.

To get the specific details and prices on today’s trade ideas, be sure to read today’s ODDS Online Daily Option Trade Idea.