Two days ago, on April 1, over $7 million worth of Palantir stock (NASDAQ: PLTR) options were traded.
To be more precise, these contracts are puts, with a $60 strike price and an expiration date of April 25, as shared by X user John Trades MBA in an April 1 post.
PLTR shares closed at $87.45 on April 2 — however, post-tariff volatility has seen prices drop to as low as $80.50 by press time in the pre-market trading session on April 3.
The Palantir stock options in question will expire a couple of days before the company’s next earnings call, which is expected to be held on May 5.
Is this Palantir stock options bet a bearish signal?
Although this might appear to be a sign of strong, negative sentiment, the situation is a tad more complex. There are two ends to each trade, and while market participants were obviously willing to purchase $7 million worth of Palantir puts, that also means that someone was willing to sell those puts. In essence, although notable, this development cannot be taken as a reliable bearish signal, at least on its own. It is, ultimately, a bet on short-term volatility, not the Alex Karp-led venture’s long-term prospects.
The thesis behind the purchase of the options is quite clear. Although PLTR shares are not ‘directly’ exposed to risks from tariffs, the data analytics company is trading at an extremely high valuation, even relative to peers and rivals.
While other high-flying tech businesses, like Nvidia, have a buffer in the form of strong demand and stable revenues, Palantir is a much more speculative bet, as there is a significantly higher degree of future growth already priced into the stock, even at sub-$100 levels.
With an immense amount of uncertainty pumped into the markets via tariffs, it remains unlikely that Palantir stock will reclaim the crucial $100 level in April, although it remains to be seen whether downside pressure will see the stock drop below $60, making the aforementioned options trade profitable.
Featured image via Shutterstock
