Palantir Options Volume Rise as Stock Defies Wider Market Downturn: Options Chatter

Luzi Ann Santos wrote a column · May 31 01:17

$Palantir (PLTR.US)$ rejoined $NVIDIA (NVDA.US)$ and $Tesla (TSLA.US)$ in the three most active stock options Friday as shares of the software company rallied, defying a wider stock market downturn.

Shares of Palantir rose 2%, boosting the appeal of call options that give the holder the right to buy the stock at a specified price. The gains came after the New York Times reported that President Donald Trump tapped the company to compile data on Americans.

The company gained $113 million in new and additional federal spending, excluding the $795 million contract it won from the US Department of Defense last week, the report said, citing public records. Trump’s executive order for the sharing of data across agencies put Palantir’s product called Foundry into at least four federal agencies, including the Department of Homeland Security, and the Health and Human Services Department, according to the report.

Palantir Options Volume Rise as Stock Defies Wider Market Downturn: Options Chatter

(To see Palantir's options chain, click here. For the options ranking led by Nvidia and Tesla, click here.)

More than 876,500 call options changed hands as of 1:17 p.m. in New York. That compares with a 20-day average of 512,227 contracts, according to data compiled by Bloomberg. Including put options, volume reached 1.43 million, compared with Apple’s 530,970 contracts. That secured Palantir’s ranking in the most active option, behind Nvidia’s 3.8 million and Tesla’s 2.58 million.

“Any upward sales revision for Palantir on new contracts from US federal agencies including the IRS, Social Security Administration and potentially the Department of Defense could lift growth in the company's government segment,” Bloomberg Intelligence analysts Mandeep Singh and Damian Reimertz wrote in a note Friday. Still, they noted that those contracts come with a price.

Growth in US government contracts could erode its commercial business, the analysts said. Commercial business growth “has been slowing due to fewer new customers outside the US, a trend we believe could be exacerbated given Palantir's involvement with sensitive data collection for US agencies,” they said.

The close ties between Palantir Chairman Peter Thiel and the Trump administration has contributed to the positive sentiment for the software company that derives more than half of its revenue from government contracts.

The Telegraph has named Thiel among the billionaires who will shape Trump's second term at the White House, alongside $Tesla (TSLA.US)$ Chief Executive Elon Musk, Hedge fund manager John Paulson and a few others. Business Insider referred to Thiel as the "kingmaker" who played a big role in putting Trump's running mate JD Vance on the path to the vice-presidency, while CBS News called him the billionaire who fueled Vance's rapid rise to the Trump VP spot.

Even deep-pocketed investors and speculators are also piling in. At 10:53:04 a.m. in New York, a pair of bullish bock trades were posted with a combined premium of $2.28 million for zero-days-to-expiration (0DTE) call options that give the holder the right to buy a total of 710,000 Palantir shares at $127 each by the end of the day. That strike price is still more than $2 above the current stock price. The block trades were the two biggest so far Friday.

Share your thoughts on Palantir in the comments section. Do you agree with the analysts who say Palantir's involvement with sensitive data collection for the Trump administration could curb its appeal to commercial clients? Let your voice be heard by voting below. And if you want to read more options columns like this one on Nvidia, or this one on GameStop, follow me here.

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