Palantir (PLTR) shares are on track for a 40% return, sparking concerns about overvaluation. Investor Cathie Wood’s recent sell-off and the company’s impressive fourth-quarter earnings report have fueled the rally. However, experts caution that investors should not chase hot stocks without a clear understanding of the risks.
Using Barchart’s Expected Move calculator, which reflects the price range expected from the current price based on 85% of at-the-money straddle value, PLTR stock could potentially rise to $124.75 or drop to $97.81 over the next four weeks. However, a dynamic calculation based on conditional probabilities suggests that by March 7, PLTR will gain around 8.53%.
Considering the high long odds and potential upside, investors may consider a bull call spread strategy with a short strike price of $121 or lower. The most balanced option is the 103/120 spread, but this comes at an expense of $860 for the chance to earn $840. A cheaper alternative is the 115/118 spread, which requires PLTR stock to get close to the short strike price just to break even.
Despite the risks, Palantir’s growth and FOMO-driven optimism make it a bullish opportunity. With market intelligence, investors can make informed decisions about their options strategies.
Source: https://www.barchart.com/story/news/30825083/is-palantir-pltr-overvalued-the-empirical-data-might-surprise-you