MM75 - PLTR Short Call Discussion

This question has come up so many times that I decided it was time to make a Market Minute out of it. This is not financial advice. I am not a CPA and I am not a trading advisor. Let's talk about Palantir. A lot of you are short calls on Palantir right now. I am hearing September 170 calls and October 170 calls, and it seems to be a mix of both.

Let me walk all the way back to the beginning. I am not short this call, and I want to be clear that I am not picking on you for being short it. It is a great trade. I just want to share my knowledge and wisdom to help you see why I personally took a pass on it. When I started in the community, I said Palantir is one of the best trading range stocks I can find. We had tons of resistance up at 160 and a lot of support down at 122. I commented in Kilo Club and Rapid Fire that when it finally breaks out, it is going to fly, and that old resistance will become new support. And guess what? That is exactly what it did. We broke out, retested the 200 SMA right on the nose, and went straight back up.

So what do you have working in your favor on these short calls you are holding? You have  sell divergence, a higher high on the stock with a lower low on mean reversion. That is the good news. And the next little piece of good news is major resistance closing in around the 194 level. I have no idea if it goes there before rolling over, but I wanted you to see it.

So what do you actually do here? It depends entirely on who you are and what your plan is. Let me walk through the variations, starting with the September holders.