Palantir Technologies, Inc. (PLTR) is trending in the news. Analysts at Argus Research initiated coverage on PLTR with a buy rating and they mentioned that AI technology will continue to drive PLTR’s future stock price up to $29 per share. Social media mentions are up 315% in the last 24 hours.

From an options trader’s perspective, the 2-month implied volatility (the lower blue line in the chart below) is coming off of lows in May and beginning to rise in anticipation of the earnings report scheduled for release on August 5th.

You can clearly see the earnings pattern in the 2-month implied volatility in the chart below.

This MDM graph compares the modeled expectations of current options prices (the orange line) to the actual movement of PLTR’s stock price over the past two years. You can see that the actual behavior (the blue histogram) made big moves up and down a bit more frequently than the modeled options prices expect. This tells us that PLTR options for August 16th expiration are relatively inexpensive.

This Volatility Cone graph is showing us that volatility expectations (the yellow dots) are all below the two-year average. To learn more about the Volatility Cone, click here. The current volatility expectations for the 2-month period are higher than the other periods but remain below the 2-year average. This is likely due to the anticipation of earnings.
However, this graph does confirm that the 2-month options are relatively cheap.

This Volatility Term Structure chart is showing us that volatility expectations spike going into the August 16th expiration. To learn more about Volatility Term Structure, click here. This is almost certainly because investors are anticipating a potentially large move after the August 6th earnings report. The good news is that options are still relatively cheap right now. The spike in volatility expectations is because the stock has a history of making big moves around earnings.

PLTR’s volatility expectations and options prices are relatively low. The company is riding the AI trends, and they have an earnings report scheduled for August 5th. The earnings report could be the potential catalyst for a big move in the stock price. This favors option buying strategies.
Be sure to read the ODDS Online Daily Trade Idea report to get the details of our trade ideas for PLTR today.

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Thank you,

Don Fishback