Palantir Technologies Inc. (PLTR) is trending in the news this morning after the company reported yesterday that it has achieved the “FedRamp High Authorization” status for its full product suite. This allows PLTR to license all of its products, including its cloud AI product, to government agencies in a matter of days. Social media mentions are up 841% in the last 24 hours.

The best news is that we have an open trade on PLTR. We posted the trade idea on 10/9/24. If you entered the trade using our one of our preferred strategies, you may be holding the 42 Call, either as part of a straddle trade or bought outright, for the 1/17/25 expiration. You can see in the chart below that the current stock price hit a new all-time high yesterday after the news hit. You can also see that the stock is far outside the one standard deviation probability cones and the 3-month implied volatility is higher than it was when we entered our position. If you’ve been with us for a while, and you participate in ODDS Online Coaching sessions, you know that we like to take profits on our trade in this situation. We do NOT exit our trade completely! We want to let our profits run as far as they will. But we do want to take some money off the table at this point, if you have not done so on your own already.

This MDM graph  compares the modeled expected distribution for future stock prices (the orange line) with the actual distribution of PLTR’s prices over a 4-year period (the blue histogram). This is what the graph looked like with the data we had on 10/9/24. The tool tip shows approximately where the stock price is this morning. As we expected, PLTR made another big move after announcing earnings and our trade is in a nice profitable position.

This MDM graph shows where we are today. The tool tip shows approximately where the stock was when we entered the trade. In this graph, we can also see that the markets expectation (the orange line) more closely matches the way the stock price has actually performed over the last year. The previous MDM graph showed that options were underpriced. This graph shows us that if we take some profits now, we will likely get a fair price for the options. We bought our options at wholesale prices, and now we can sell them at a fair price for a nice profit.

One of the nice things about our favorite neutral strategy is that if you enter the trade and later everyone is talking about the stock, like they are about PLTR today, you are probably in a profitable position. So, if you’re one of the hundreds of people talking about PLTR on Reddit or X, be sure to mention that compressed stocks going into earnings have the potential to be a big money makers. 

Remember, we are NOT exiting the trade completely. We are just locking in a profit and continuing to hold a position that can still earn more profit if the stock continues to move upward. Which it certainly can do. We still have over a month of time before our options expire. 

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

To access Odds Online Daily and be able to see any stock you are tracking in this software, click here.

Thank you,

Don Fishback