Why Options Traders are Targeting Palantir Stock Today

One trader is targeting a put contract at the 15 strike

Deputy Editor
Feb 17, 2022 at 1:12 PM
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The shares of Palantir Technologies Inc (NYSE:PLTR) are struggling on the charts and have been for much of 2022, down 31.7% year-to-date with multiple pullbacks saved by a new floor at the $12 level. At last check, PLTR was down 11.1% to trade at $12.42, following a lackluster fourth-quarter earnings report that saw earnings miss Wall Street's expectations. Revenue, on the other hand, did beat forecasts, though it did evidently little to help the plummeting stock, which is down more than 54% in the last 12 months.

PLTR Chart Feb 17

Options traders are coming out of the woodwork to get in on Palantir stock's negative price actions. At the session's midway point, 276,000 calls and 155,000 puts have crossed the tape, which is triple the intraday average. It looks as if one investor bought 2,641 contracts on the March 15 put for a volume-weighted average price (VWAP) of $2.64. If this is the case, breakeven for the put buyer at the close on Tuesday, March 22, is $12.36 (strike less premium paid).

A broader look shows puts are the popular choice amongst options traders. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Palantir stock sports a 50-day put/call volume ratio that sits higher than 87% of readings from the last year. This means that while calls are outnumbering puts on an absolute basis, the latter are have been getting picked up at a much quicker-than-usual clip. 

Echoing this, short-term options traders have rarely been more put-biased in the past 12 months. This is per PLTR's Schaeffer's put/call open interest ratio (SOIR) that stands in the elevated 88th percentile of its 12-month range.

And all of these options buyers are in luck. The stock's Schaeffer's Volatility Scorecard (SVS) sits at 89 out of 100, meaning the equity has exceeded option traders' volatility expectations during the past year.


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