Sell 2 covered calls for pltr potential $140 returns
Optimizing My Palantir (PLTR) Position: A Strategic Approach to Options Trading
Yesterday, I made a series of calculated moves to optimize my Palantir Technologies Inc. (PLTR) position by employing a well-rounded options strategy. By focusing on maximizing premiums and reducing the cost basis of my shares, I’m able to effectively improve my returns while managing risk. Here’s a breakdown of my strategy and how it all played out.
Buying 200 Shares of Palantir at $39.44
I started by purchasing 200 shares of Palantir at $39.44 per share, recognizing the potential upside in the stock, especially with the growing momentum in AI-related technologies. This was a deliberate move as I believed the price was attractive given the company’s future prospects. However, buying at this price might seem high if PLTR experiences short-term pullbacks, so I needed to hedge my risk and reduce my cost basis$Palantir Technologies Inc.(PLTR)$
Selling Covered Calls to Reduce My Cost Basis
Immediately after buying the shares, I implemented a covered call strategy. I sold a PLTR 39.00 call option, expiring on October 11, 2024, for a premium of $1.17 per share. This move effectively lowered my cost basis from $39.44 to $38.27 ($39.44 - $1.17).$PLTR 20241011 39.0 CALL$
This is a smart tactic for several reasons. First, it generates instant income from the premium. Even if the stock price remains flat or declines slightly, I still benefit from the option income. Second, if the price exceeds $39.00 and my shares are called away, I will lock in a profit while keeping the premium.
Why Selling Covered Calls Works Well
By selling a call option at $39.00, I agree to sell my shares at that price if Palantir trades above $39.00 before the option expires. With the premium income, I have some downside protection, and in the event the stock surges past $39.00, I still capture gains from the premium and the appreciation of the stock.
In essence, this covered call allows me to profit whether Palantir stays stagnant, rises moderately, or slightly dips. The reduced cost basis gives me a safety cushion, while the premium income continues to compound my returns.
Conclusion
By strategically combining share purchases with covered call selling, I have maximized my earning potential with Palantir, effectively lowering my cost basis and generating extra income. This strategy is perfect for those who believe in the long-term prospects of a stock but want to hedge against short-term volatility. With the options premium collected, my new effective cost for Palantir is $38.27, positioning me well whether the stock rises or stays range-bound in the near term.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
- Mal06·10-10TOPOn hindsight, look like a lot of effort for very little gainsLikeReport
- Jo55·10-08In my opinion, current market price for PLTR is very much over its intrinsic value, quite risky to purchase the stock at current price. The premium collected might not be able to cover the loss if there is a big price reversal. I have been waiting for the price to dip to a safer and support level, then to sell cash secured put instead.LikeReport
- LesleyNewman·10-08Nice moves with your Palantir position! Optimizing returns and managing risk. [Applaud]LikeReport
- PSG2010·10-08Great strategy! Maximizing returns and managing risk [Smart]LikeReport
- Jeromeee·10-09LOLLikeReport