Covered Call With Palantir

Palantir took a little beating the last few days moving down about $10. I’m watching the stock closely because I own Calls expiring in January. I noticed the stock just went above the Volume-Weighted Average Price (VWAP). This is one of the technical analysis lines I have on my 1 minute candlestick chart. In addition to the stock moving above the VWAP line I like the stock in the $70 area. I decided to check out the premiums for selling Calls. I bought 200 shares of PLTR at $70.30 and sold 2 PLTR 12/13/24 $71 Calls. This is a three day Call and I received a premium of $1.85. With the 2 contracts that’s $370.

Buy 200 Shares PLTR @ $70.30

Sell to Open 2 PLTR 12/13/24 $71.00 C @ $1.85 (+$370)

I’m in this position for the premium. I hope the stock moves above my Strike Price of $71 and I get assigned. I’ll keep the $370 and I’ll make 70¢ on the stock sale for another $140. If assigned this trade will give me a total profit of $510. This would be a great three day trade.

The premium alone is 2.6%. If I get assigned the total profit will be 3.6%.

As I’m writing the stock came down and touched the VWAP three times and bounced north each time. For this trade to work nicely I need the stock to stay above the VWAP.

 

Successful trading,

Steve

The Options Coach