To The Moon

Strategic Swing Trade: Managing Risk and Enhancing Returns with PLTR Options

$PLTR 20251017 80.0 CALL$ 

As an options trader, leveraging both calls and puts strategically can create opportunities for short-term gains while effectively hedging risk. Recently, I executed a swing trade on Palantir (PLTR) options, targeting the $80 strike price with an expiry 11 months from now. Here’s a breakdown of my thought process and execution.

The Trade Breakdown

On November 19, I sold 2 PLTR call contracts at a premium of $9.50. This move capitalized on the elevated premiums due to the extended expiration and higher volatility. Shortly after, I identified an opportunity to buy back the same 2 call contracts at $9.23, locking in a quick profit of $0.27 per share (or $54 total for the two contracts).

Simultaneously, I am managing a PLTR $63 sell put contract expiring on November 22. This put contract exposes me to potential assignment if PLTR trades below $63 by Friday. To mitigate this downside risk, the quick profit from the swing trade acts as a hedge, effectively lowering my breakeven cost if assigned.

Why This Strategy Works

1. Capture Premium with Flexibility: Selling a long-dated call allows you to take advantage of time decay and higher implied volatility, while buying it back swiftly captures a profit when prices fluctuate.

2. Hedging Against Sell Puts: By executing a profitable swing trade on calls, I created a cushion to offset any potential loss or assignment from my $63 sell put. This reduces my overall exposure while keeping the trade capital-efficient.

3. Balancing Short-Term and Long-Term Views: Selling the call at $80 is a calculated move, as this strike price is well above the current market, reflecting my neutral view on PLTR over the long term while managing short-term risks.

Key Takeaways

This trade highlights the power of combining call and put strategies to manage risk dynamically while generating consistent income. It’s not just about maximizing profits—it’s about managing risk intelligently. By understanding market conditions and premium movements, you can take quick, decisive actions that keep your portfolio balanced.

@TigerStars 

@MillionaireTiger @Daily_Discussion do support my post 

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Options trading carries significant risks, and you should consult a licensed professional before engaging in such trades.

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