Palantir Technologies, Inc. (PLTR) stock is potentially forming a bottom, presenting a value opportunity. Trading at $128.71 on Feb. 24, down 33% from $194.17 in 2 months, PLTR’s underlying value suggests upside. Shorting OTM puts and buying ITM calls may be a strategic move. PLTR could reach $189 to $245 in a year.

Shorting high-premium OTM puts on PLTR offers immediate yield and lower buy-in breakeven points. For example, the March 27 $125 strike put offers a 5.264% yield. This income strategy can potentially lower buy-in points for value investors, setting the stage for buying in-the-money long-dated calls.

Buying in-the-money long-dated calls on PLTR, like the Sept. 18 $120 strike call option, can leverage potential upside. With a breakeven point of $147.95 and extrinsic value covered by shorting OTM puts, investors can amplify potential returns. Combining short-put plays with call purchases offers a better return potential.

Investors can mitigate downside risk by purchasing ITM calls, providing protection in case PLTR remains flat. Even if PLTR stays at $130 by Sept. 18, the investor can still earn a return, showcasing the strategy’s appeal. Overall, leveraging PLTR’s high put premiums and low ITM call prices can yield attractive results.

Read more at Barchart: Buying In-the-Money Palantir Calls Looks Attractive Here for Value Buyers