5d • General discussion
Everyone Is Buying PLTR Calls. Here's Why That's the Wrong Trade
The market is pricing a 9-11% move into tonight's print, but PLTR's average realized move over the last six quarters is closer to 20-21%. Front-week IV is near 90%. Looks expensive, but it isn's. Implied has underpriced this event consistently, and not once or twice, but every single quarter in that sample. We are buying a dollar of earnings risk for fifty cents.
That's why the structure matters more than usual here. Options flow going into tonight is heavily call-sided (call skew). Speculative positioning is stacked into the 150-160 zone, which is also major technical resistance. That leaves dealers short gamma and long stock into that level, which means if the print is good but not great, and the stock fails to break through 150, we get IV crush plus dealer hedging pressure flipping the tape lower simultaneously. The left tail looks structurally fatter than the skew implies.
The valuation makes it worse: PLTR trades at 90-230x earnings depending on how you measure it, 40-50x sales. Those multiples only hold if 2026 guidance confirms a long runway for 60%+ growth and commercial AI demand stays at triple-digit rates. Tonight’s EPS beat or miss matters less than how Karp frames the next 12 months. Any wobble in that narrative and we get multiple compression, really, really fast.
So the structure choice here is also not obvious. Normally, steep put skew is where you reach for a Jade Lizard, we use it when the market is pricing downside fear and we want to collect that inflated put premium. PLTR has steep call skew tonight. That's the opposite of the textbook setup.
But skew isn't the only variable. The volatility surface here; binary narrative, crowded upside, fat left tail, extreme multiple etc. demands management flexibility above everything else. A strangle gives you two naked legs and limited options when one side runs, the Earnings Jade Lizard caps the upside completely and leaves one clean leg to manage. That trade-off is worth more than the skew edge we're giving up.
My trade: Sell 130 Put, Sell 150 Call, Buy 155 Call (45 DTE), Net credit $647, Max profit $647, Probability of Profit (PoP) 77%. No upside risk.
The call spread neutralizes all upside risk above 155, and the net credit fully covers the cost of that spread. The only open risk is the short put below 130, which sits near technical support. That’s where we want to focus our management attention if the narrative breaks down tonight. If the stock drops hard, we manage the put side actively: roll, adjust, or convert it into a strangle. I cover that full management process in the Trading Plan.
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Everyone Is Buying PLTR Calls. Here's Why That's the Wrong Trade
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