Palantir Earnings: Can it Pull Off a Microsoft-Style Comeback?
Palantir's recent stock performance has some investors drawing parallels to Microsoft's past. The software provider is facing a nine-month bear market, but hopes are running high that it can make a comeback after its earnings report on Monday night.
The chart of Palantir looks similar to Microsoft's going into its report last year, and that stock has since rallied 25% in three days. Options flows around Palantir also mirror those seen before Microsoft's report, with traders buying calls and betting on a bigger-than-usual swing.
According to ThinkOrSwim data, over twice as many Palantir calls traded than puts by volume Monday, with traders buying 56,000 calls and fewer than 25,000 puts. The top five contracts traded by volume were all calls, SpotGamma data show.
The most popular contract for bulls was the 130-strike call expiring Friday, where traders bought 8,500 contracts totaling $4.4 million. This contract needs an 8% rally before the weekend to pay off and is currently trading at $5.30 a contract. The 150 and 140-strike calls were second and third-most popular by volume.
Cboe LiveVol data shows options pricing implying a 10.5% move after earnings, bigger than the median 7.4% move the past year. However, for the past five straight quarters, Palantir options have overestimated the actual move, the data show.
While there is heavy call volume, bears are still taking shots. Seven of the eight biggest dollar-amount trades of the day were neutral or bearish, according to Cboe data. The largest premium trade was a sale of 800 of the 145-strike calls in Palantir that expire in mid-December 2028, a bearish bet against extensive gains in the stock that brought in $3.4 million for the seller.