Palantir (PLTR) stock has seen a significant increase, trading at $24 a year ago and now at $158. The stock has shown a 50% dip but has a market cap of nearly $400 billion with less than $500 million in net income in 2024. The stock’s future growth expectations are driving its high valuation.

The stock is 50% above its 150-day moving average, indicating a slowing in momentum. The weekly chart shows a parabolic move up, but projections into the future are driving the rally. The stock’s implied volatility level is triple that of the broad stock market, making collaring an effective strategy.

Options for PLTR are expensive due to its high volatility level. A put option struck at $140 could cost $11.80 per share to protect the stock below that level. On the covered call side, projecting where the stock could go is challenging, but balancing downside protection with potential profit is crucial.

Considering a covered call strategy with PLTR, aiming for the $200-$220 area could provide more upside potential. Collaring stocks like PLTR is seen as a defensive strategy, providing ongoing guardrails for stocks in a volatile market. Investors must balance risk management with profit potential in fast-moving stocks like PLTR.

Read more at Yahoo Finance: 1 Options Trade You Can Use to Protect Historic Gains in Red-Hot Palantir Stock