To The Moon

Palantir Attracts Millions of Dollars in Bullish Option Trades

$Palantir Technologies Inc.(PLTR)$   attracted bullish option block trades worth millions of dollars Wednesday after the software company unveiled a list of new customers.

The biggest of the block trades involved an active buyer paying a $1.59 million premium for call options that give the holder the right to buy 190,000 Palantir shares at $125 by Nov. 21. That block trade, posted at 10:40:12 a.m., represented about 95% of that contract's total volume for the day. 

Bulls were emboldened as the stock price rallied 7.2%, recovering from a bruising sell-off that wiped off more than a third of its value from its peak. While Wednesday's jump sent shares back up to $83.65, that's still a long way from an all-time high of $125.41 reached on Feb. 19.

On Tuesday, the company said new customers include $Heineken N.V.(HEINY)$  , $Walgreens Boots Alliance(WBA)$  , R1 RCM, RaceTrac and Ripcord. “The next wave of Warp Speed customers will also showcase how they are re-industrializing American manufacturing, including Red Cat, Saildrone, Saronic, SNC, and Ursa Major,” Palantir said in a press release, referring to the company's manufacturing operating system designed to enhance the speed, flexibility and security.

The announcement “suggests that commercial momentum has continued,” William Blair analyst Louie DiPalma was quoted by Barron's as saying. Commercial revenue accounted for about 45% of Palantir's revenue in 2024 and the rest were from government contracts. 

In the fourth quarter, the company's commercial revenue grew 54% to $702 million, outpacing a 30% expansion in government revenue. 

In the first hour of trading Wednesday, another bullish block trade was posted. The seller collected a premium of $1.01 million for writing out-of-the-money put options that give the holder the right to sell 194,000 Palantir shares at $65 each by June 20. Those put options would be profitable for the seller should the stock continue to trade above that strike price, allowing the contract to expire worthless. 

The stock soared more than 240% in the six months through its peak in February. That rally came amid increasing revenue and expectations that the company could benefit from favorable policies of a Trump administration. In November alone, the month when Donald Trump was elected to the presidency, Palantir shares climbed more than 61%. 

That rally faded amid a wider stock market sell-off that erased this year’s gains for the S&P 500 and the Nasdaq Composite. The slump came amid mounting uncertainty over Trump's trade policies, including the potential impact of tariffs that will be imposed by the US and the retaliation from its trading partners. 

More than 62900 call and put options changed hands across 22 expiration dates. That made Palantir the day's fourth most active stock option behind $NVIDIA Corp(NVDA)$  , $Tesla Motors(TSLA)$   and $Apple (AAPL.US)$.

Before the sell-off, Palantir shares traded at 232.5X forward earnings at their peak on Feb. 18. That has since fallen to 156X earnings but still well above Tesla's 87X and Nvidia's 25X.  

Despite the run up in the share price, CFRA analyst Janice Quek maintained her buy rating on Palantir, citing its “strong fundamental trends, an accelerating growth outlook and a healthy spending environment supportive of AI investments in the enterprise space.”

Quek is one of six analysts with a buy rating on Palantir. Fifteen other analysts, representing about 60% of those who cover the stock, have a hold rating, while 16% have a sell rating, data compiled by Bloomberg show.

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