Palantir (PLTR) Options: Are the Premiums Worth It?
Summary
PLTR trades around $15-$25 with IV between 45% and 65%, generating covered call premiums of 3-5% monthly. The stock has massive retail options volume (often top 10 in the market), tight spreads, and weekly expirations. But PLTR's valuation (often 60-100x forward earnings) means the stock is priced for perfection, and any disappointment can trigger sharp selloffs. The premium is real, but so is the risk.
Key Takeaways
PLTR's low share price ($18) makes it accessible for small accounts — 100 shares costs $1,800. Options volume frequently exceeds 500,000 contracts daily. The stock moves 10-20% on earnings with regularity. Government contract wins and AI narrative shifts drive most of the volatility. For income traders, position sizing is everything — the premiums are generous, but the drawdowns are steep.
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Palantir has one of the most passionate retail followings in the market. The stock's AI narrative, government defense contracts, and charismatic CEO create constant news flow that keeps options volume and IV elevated. For premium sellers, this is both an opportunity and a warning.
The Premium Opportunity
With PLTR at $18:
| Strike (30-DTE) | Delta | Premium | Monthly % | Annualized |
These are exceptional yields. The 0.20 delta call at $20 pays 3.6% monthly — comparable to NVDA's premium percentage and higher than most mega-caps. On a $1,800 position, that's $65 per month. Not life-changing per contract, but run 5 contracts ($9,000) and you're earning $325/month.
The Risk Side
Valuation risk. PLTR trades at 60-100x forward earnings depending on the month. If growth slows from 20%+ to 15%, the multiple compression could be 30-40%. That's a $6-$7 drop on an $18 stock.
Government revenue concentration. Roughly 55% of PLTR's revenue comes from government contracts. A shift in defense spending priorities or a contract loss can move the stock dramatically.
Earnings binary. PLTR has moved 15%+ on 4 of its last 8 earnings reports. The stock went from $17 to $21 on one report and from $20 to $16 on another. Selling calls through earnings is a coin flip.
Best Strategy: The Wheel
PLTR's low price makes the wheel strategy practical for small accounts:
Phase 1 — Sell puts: Sell the $16 put (30-DTE) for $0.50. Cash required: $1,600. If PLTR stays above $16, you earn 3.1% in a month.
Phase 2 — If assigned: You own 100 shares at $16 (effective cost $15.50). Sell the $17 covered call for $0.55.
Phase 3 — If called away: Total profit = ($17 - $15.50) + $0.55 = $2.05 per share, or 12.8% on your $1,600 capital in roughly 60 days.
If not called away: Repeat covered calls until assigned or the stock recovers to your target.
Position Sizing Rule
Because PLTR can drop 20-30% in a quarter, never allocate more than 5-10% of your options portfolio to PLTR positions. On a $50,000 account, that's $2,500-$5,000 — enough for 1-3 covered call contracts or put positions.
The premiums are absolutely worth it if you size appropriately. The traders who get hurt are the ones who see 43% annualized yields and go all-in.
When to Sell Premium
Best time: After a big earnings pop (IV stays elevated, stock has upward momentum). Sell calls 5-10% above the post-earnings price.
Worst time: Into earnings or ahead of major contract announcements. The binary risk isn't worth the premium.
OptionsPilot's strike finder analyzes PLTR's current IV rank and shows you which strikes offer the best premium relative to historical volatility, so you can time your entries when premium is richest.