Palantir Shares Tumble 7%, as Investors Seek Insurance Against Slump: Options Chatter
$Palantir (PLTR.US)$ shares tumbled 7.3%, signaling mounting investor worries over heightened competition from AI that have fueled increasing demand for put options used by many as insurance against a sustained slump.
Open interest, or the tally of outstanding put options stood at 1.76 million contracts, bigger than the 1.69 million outstanding call options, according to exchange data tracked by moomoo. The term structure is severely inverted, with the implied volatility for contracts expiring April 10 spiking above 70% before collapsing toward 58% next week, then popping again into May. That could be seen by some as a sign of panic hedging.
The stock has been targeted by short sellers including Michael Burry, who just this week, said in a social media post that the AI software company is losing its competitive edge to Anthropic among private businesses. Yesterday, its short volume more than doubled to 7.04 million shares, from 2.89 million shares a day earlier.
"Investor Michael Burry's view that Palantir faces stiff competition in its Commercial segment from Anthropic supports our thesis that the company's top-line growth is pressured by enterprise customers deploying LLMs directly," Bloomberg Intelligence analyst Robert Biggar wrote in a note Thursday. "Expectations look high for Palantir's Commercial unit after positive revisions in 2025, while Anthropic's annual recurring revenue is currently about $30 billion vs. $9 billion at year-end."
Source: x.com
Put options that give their holder the right to sell Palantir shares at $130 each by Friday attracted the heaviest trading among the contracts tied to the AI software company, as the stock price fell near that strike price, increasing the likelihood that the contracts will be in the money before they expire tomorrow. Over 54,550 of those put options changed hands, more than 6X the open interest.
At 11:33:33 a.m., an active buyer paid a $4.4 million premium for put options that give their holder the right to sell Palantir shares at $135 in the next 190 days. At current prices and volatility, a similar trade has a profit probability of 44.91% for the buyer.
Palantir shares will need to fall below the break-even level of $113.025 for a similar trade to be profitable for the buyer. If it does, the maximum profit potential could reach $11,302.50 per contract, which covers 100 shares. If it doesn't, and the share price stays above that level, allowing the contract to expire worthless, the maximum loss potential is $2,197.50 per contract.
Analysts, on average, expect the company to post a 28% sales growth in 2025-26 in its Commercial segment, which accounts for about 45% of total revenue, but that figure could be revised downward by 2 percentage points to 4 percentage points amid intensifying competition from foundational model providers like OpenAI and Anthropic, he said.
"Gains are likely to remain muted outside the U.S., with international limited by fewer partnerships and lower win rates," he said.
Still, there's no shortage of Palantir bulls. The biggest block trade in options tied to the AI software maker was the sale of put options that give their holder the right to sell the stock at $175 in eight days, with saw the active seller collect a $12.06 million premium.
That multi-leg transaction was posted at 3:08:54 p.m., the exact time when put options with a strike price of $157.50 expiring tomorrow was also posted. That trade generated a premium of $11.79 million shares, signaling the seller's optimism that the stock could rebound.
But it wasn't just the short sellers who have pushed the stock lower. Palantir has seen outflows in 10 of the past 11 months and Thursday's data signals that's not about to end. Outflows outpaced inflows by $181 million, driven by small orders, indicating that retail investors were unloading the stock.
Palantir shares have already tumbled more than 26% this year, compared with a 2% slide for the tech-heavy $Nasdaq Composite Index (.IXIC.US)$ and the benchmark $S&P 500 Index (.SPX.US)$'s 0.4% dip. With that slump, only 7.76% of the existing positions in Palantir are profitable. At Thursday's closing price of $130.54, the stock is now very close to $129.20, the average cost of the remaining profitable positions, considered by many to be the support level.
But even after that downturn, the stock still trades at about 99X expected 2026 earnings, a reality that has fueled the debate over Palantir's high valuation. In contrast, $NVIDIA (NVDA.US)$, the world's largest company by market value whose revenue is growing faster than Palantir’s, is trading at only 22X expected earnings for the current year.
Share your thoughts on Palantir in the comments section. What do you think can trigger the stock's rebound, or do you expect the downturn to continue? Let your voice be heard by voting below. And if you want to read more options columns like this one on Meta, or this one on Broadcom, follow me here, where you can also find my column that tracks short sellers' trading volume and other interesting stories on some of the biggest stocks.
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