Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
Investment and Options Strategist
Palantir has been back in the headlines after the U.S. Army raised the ceiling on its Maven Smart System contract to $795 million on 21 May 2025, underscoring the company’s deepening role in federal-level data and artificial intelligence projects. Market watchers noted a sharp uptick in the share price on the news, as investors weighed the long-term revenue potential of the expanded deal.
Palantir (PLTR) is a well-known technology stock with an active options market. This combination of fresh government momentum and healthy option premiums makes it an ideal case study for two beginner-friendly strategies: the covered call and the cash-secured put. Both fit investors who already hold shares or have cash on hand to buy more.
Before we dive in, here are some terms you’ll see throughout:
Important note: the strategies and examples provided in this article are purely for educational purposes. They are intended to assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor or trader must conduct their own due diligence and take into account their unique financial situation, risk tolerance, and investment objectives before making any decisions. Remember, investing in the stock market carries risk, and it's crucial to make informed decisions.
Scenario: You own 100 shares of PLTR, currently trading near $130 per share.
Scenario: You have cash set aside and want to buy more PLTR, but only at a lower price.
A long-term investor might use both the covered call and the cash-secured put at the same time:
Stock price at expiry | Covered call result | Cash-secured put result | Overall effect |
---|---|---|---|
Above $145 | Shares sold at $145 + $228 premium | Keep $196 premium | Profit on shares plus premiums |
$115–$145 | Keep shares + $228 premium | Keep $196 premium | Keep shares, earn both premiums |
Below $115 | Keep $228 premium (shares lose value) | Buy more shares at $113.04 | Own more shares at discount, earn premiums |
What if the share price is at the strike at expiry?
Usually, the option is exercised if it’s at or above the strike for calls, or at or below for puts. Be prepared for shares to be sold or bought in this case.
Can I close the option early?
Yes, you can buy back the option before expiry to lock in a gain or avoid assignment.
Should I use these strategies if I never want to sell my shares or buy more?
No—only use covered calls if you are comfortable selling above your strike, and only use cash-secured puts if you are happy to own more shares at your chosen price.
Covered calls and cash-secured puts offer practical, lower-risk ways for long-term investors to generate income or buy shares at a discount. They do require discipline and a willingness to follow through on selling or buying shares if assigned. For patient investors who want to get more from their stock portfolio, these strategies can add an extra layer of control and potential return.
More from the author |
---|