Unusual Options Activity in PLTR: Election Week Investment Opportunities
First, we have the high-stakes drama of the U.S. elections, followed by a barrage of earnings reports from major companies.
As the U.S. election reaches a critical point, the campaigns of Trump and Harris are continuously influencing market sentiment.
Currently, the general market consensus is that if Trump comes to power, he will continue to support traditional energy and infrastructure development.
On the other hand, if Harris takes office, there could be a greater focus on welfare policies, marijuana legalization, green energy development, which are likely to boost U.S. exports, and housing support.
Interestingly, many believe that whether Trump or Harris wins, both cryptocurrencies and gold are likely to benefit.
Known for its focus on big data analytics, the company has drawn significant attention from investors due to its involvement in the defense and artificial intelligence sectors.
With the U.S. election approaching, the future of PLTR is shrouded in even more uncertainty.
Why is the U.S. election so crucial for PLTR?
It's because the new government's policy directions could directly impact the defense and AI sectors.
For instance, if the new administration decides to increase the defense budget or strongly promote AI technology development, it could positively influence PLTR’s business expansion and growth.
With AI technology backing its future, PLTR is highly anticipated by the market.
Throughout the year, its stock price has surged, with its market value nearing $100 billion.
The upcoming third-quarter earnings report, set to be released on November 4, is also a major focus of the market.
We notice that among all the options expiring on November 8th, the call option with a strike price of $50 has a trading volume of over 8,000 contracts, significantly surpassing the volume of options with other strike prices.
This indicates that a substantial amount of capital in the market is betting on PLTR's stock price rising further to $50 following the earnings release.
For investors, this is not just an earnings release but an exciting market event.
In the current market environment, to navigate the options market effectively, savvy players need to use some tools to formulate strategies.
An options activity analysis tool is a great helper.
By using moomoom's Options Unusual Activity feature, you can easily track the movements of large funds and uncover more investment opportunities.
Let's open PLTR's Stock Quotes Page, then click on Options > Unusual Activity to see the capital movements of smart investors.
Ⅰ. A Possible Covered Call Strategy
On November 1st, we identified a large sell order involving call options with an expiration date of January 15, 2027, and a strike price of $60.
The option premium amounted to $1.54 million, which is a significant order for PLTR options trading.
This transaction might be a Covered Call strategy, indicating that the investor has a relatively conservative view of PLTR's long-term stock price, believing it may not reach $60 in the next few years.
By selling long-term LEAPS call options, they aim to earn a higher premium.
(Reminder: This is just a prediction and may not necessarily reflect the investor's true intentions.)
For investors who are optimistic about a stock in the long term and choose to hold it, selling calls on the stock can provide additional income from option premiums.
A Covered Call works like "collecting rent" on your shares, as the passage of time benefits option sellers. To earn more "rent," investors can choose to sell out-of-the-money (OTM) calls with longer expiration dates.
How to Trade options on moomoo
Scenario 1: Without the underlying stock.
Access: Go to Options Chain > Tap on the Strategy tab at the bottom of the screen > Select Covered Stock
The system will then automatically help you buy 100 shares of the underlying stock and sell one Call option, forming a covered call.
Scenario 2: Already own the underlying stock.
Access: Go to Options Chain > Tap on the Strategy tab at the bottom of the screen > Select Single Options and directly sell a call option.
The system will automatically recognize and construct a covered call for you.
Ⅱ. A Possible Short Strangle Strategy
On October 30th, we noticed two orders:
selling a call option with a strike price of $50 and a put option with a strike price of $40, both expiring on November 8th. This forms a Short Strangle strategy.
This strategy aims to earn option premium income by simultaneously selling call and put options.
So, what exactly is a Short Strangle strategy?
It involves selling call and put options with the same underlying asset, expiration date, and contract quantity, but with the put's strike price lower than the call's strike price.
By selling both call and put options, the strategy profits as long as the stock price fluctuates moderately within a certain range.
The chosen expiration date coincides with the post-earnings release period, suggesting that investors might expect PLTR's stock price to remain within a certain range after the earnings report.
They also anticipate a drop in implied volatility (IV), known as "IV Crush." Generally, IV tends to be high before an earnings release due to uncertainty, but it typically drops afterward as uncertainty decreases.
Click to learn more>>Short Strangle
We know that implied volatility (IV) is typically high before an earnings release.
For instance, in the screenshot mentioned above, we observed that on October 30th, the IV for two options was as high as 105.39% and 106.58%, respectively, at the time of the order.
After the earnings report is released, the uncertainty surrounding the company's performance decreases, leading to a rapid drop in implied volatility, a phenomenon known as "IV Crush."
Let's wait and see if an IV Crush occurs after the earnings report. You can also click on this specific options order to track its profit and loss performance and see how the market plays out the outcome of this strategy.
How to set up a Short Strangle on moomoo
If you don't have the underlying position, you can go to Options Chain > Tap on the Strategy tab at the bottom of the screen > Select Strangle.
Choosing Sell, the system will then automatically help you sell one put option and sell one call option, forming a short strangle.
In short, the market can be unpredictable.
Smart investors use tools to analyze trends and make informed decisions.
Check out the features on moomoo—your next investment opportunity might be closer than you think!
In-depth data: Gain key insights behind potentially significant transactions so you are able to make more informed trading decisions.
Filter and subscribe: Customize your filters to focus on what matters to you most, providing you ready access to relevant information.
Follow trades easily: With just one click, you can copy trades and use simulated return analysis to support your investment strategies.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
A Humble Mooer : PLTR has long term tailwinds and if you got in below 20 hold but it's seriously overvalued compared to its peers. It is only a swing trade at current valuations as wall street will eventually pull it back
Rich365 : what was that you were saying about a pull back.
ChrissyGee : PLTR is too volatile
MiMiMooo : v
72527293 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Kelly_Liu :
72398691 : Nice!
70190156 :
Beatty988 :
Joey Bagadonuts : ok
View more comments...