To The Moon

Overview of the Trade

On November 11, 2024, I purchased 101 shares of Palantir Technologies Inc. (PLTR) at a price of $59.42 per share. Shortly after, I sold a call option with a strike price of $60, expiring on November 15, 2024, and earned a premium of $1.49 per share. With the current PLTR stock price at $60.30 on November 12, 2024, this setup qualifies as a covered call strategy, where I own the shares of the underlying stock and sell a call option against it.

Covered Call Explained

In a covered call, I hold the stock (PLTR) and simultaneously sell a call option. If PLTR’s price stays below the strike price of $60 until expiration, the option will expire worthless, allowing me to keep the premium of $1.49 per share while retaining ownership of the stock. However, if the stock price rises above $60, I may have to sell my shares at $60 due to the obligation of the call option$Palantir Technologies Inc.(PLTR)$  

Risk and Reward

With this trade, my maximum profit consists of the premium and the potential appreciation up to the strike price. Since I bought the stock at $59.42, the maximum I could sell it for (if the option is exercised) is $60. This gives me a potential price appreciation of $0.58 per share. Adding the $1.49 premium from the option, my maximum profit per share is $2.07. Multiplied by 100 shares, my total potential profit is approximately $207.

If the stock price falls below $59.42, I will incur a loss on the stock itself, partially offset by the premium received. However, as I retain ownership of the stock, any long-term price recovery would allow me to recoup potential losses.

This covered call allows me to generate income while holding PLTR, providing a conservative way to enhance returns with limited downside risk, assuming I’m comfortable with potentially selling at $60.$Palantir Technologies Inc.(PLTR)$  

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