Abstract: Describe the reasons of trading long call stock options of Palantir, and share the reasons of this strategy.
Transaction detail
Today I am sharing with you about the transaction I made on August 8, the detail is as follows:
- Long call
- Palantir Technologies Inc（US stock ticker：PLTR）
- 300 units of stock option
- Expiration: 2024-01-19
- Strike price: US$15
- Stock price at transaction: US$10.07
- Option price: US$1.69
- Commission fee: US$2.07
- Premium received: US$509.07
Palantir stock 30-day chart
A bit revision on the long call strategy
The principle of a long call is very simple, that is, you bet the underlying stock will rise. When the underlying stock rises, the price of the option will rise accordingly. But to go a little deeper, the option holder has the right to buy the underlying stock at the strike price even if the underlying stock rises above the strike price on or before the expiration date. For example, the strike price is US$15 for the long call Palantir in this transaction at a cost of US$1.69, and the expiration date is January 19, 2024. This cost of US$1.69 I paid gives me a period of time to wait for Palantir Shares to rise over US$15. Taking into account the cost of US$1.69, Palantir’s share price has to rise above US$16.69 before I start to make money. For another example, if Palantir rises to US$30 one day in 2023, I can exercise my three call options to buy 300 shares of Palantir at US$15, deduct the cost, and earn (30 – 15 – 1.69 ) * 300 = $3993. On the other hand, another advantage of long call, which I think is also its biggest advantage in my opinion, is that the worst case is completely predictable, and the biggest loss is the option premium you paid. For example, my biggest loss in this transaction is US $1.69*300 + US$2.07 = US$509.07, but in theory, the upside is unlimited, of course, this depends on your stock selection ability.
Why long call Palantir?
Mainly because I think the current price of Palantir has dropped to a low level of around $10, and I think big data and artificial intelligence will be the future trends, and Palantir is recognized as a leader in this field, so I think in the long-term it shouldn’t be too bad for Palantir. Therefore, I opted for the longer-term Palantir long call, hoping to try to catch the moment when its value picks up. Of course, I also think this transaction is purely speculative, no different from gambling. Just look at how Palantir’s stock price will develop in the next year and a half!
Comments and sharing
I am going to finish it here. If you have any questions, please feel free to leave a message or comment below, I will reply you. Or if you find anything incorrect in the article, please let me know and learn from you. If you find it interesting or it may help you in any sense, please share with other people.
