Palantir Shares Surge Over 65% From June Low, RSI Near Overbought
Palantir Technologies shares have climbed more than 65% since their June 25 low, with a 3.5% gain on Friday pushing the stock above $180. The 14-day relative strength index reached 69.50, approaching the 70 overbought threshold. Meanwhile, the PutDex index for Palantir put options sits in the bottom decile of its 52-week range, indicating unusually cheap downside protection despite the stock's rally.
Palantir Technologies shares have continued their recent ascent, accumulating a gain of more than 65% since the June 25 low. On Friday, the stock rose approximately 3.5%, breaking through the $180 level. The company's 14-day relative strength index (RSI) reached 69.50 at midday Friday, approaching the widely watched overbought threshold of 70.
Tracking Palantir's 30-day put options with a strike price one standard deviation below the current price, the PutDex index is currently in the bottom decile of its 52-week range. This indicates that put options, which institutional investors typically use to hedge downside risk, are trading near their lowest prices over the past 52 weeks, even as the stock hovers near its yearly high. Typically, demand for puts increases during rapid price advances, but Palantir's put prices are currently lower than comparable call options, reflecting strong market sentiment for further upside.
As a concrete trading example, at midday Friday when the stock was at $180.85, a put option expiring September 25 with a $170 strike price was priced at $5.90 (or $590 per contract). Using a put spread strategy, buying this option while selling the $155 strike put would result in a net debit of approximately $3.60 (or $360 per contract), with a maximum profit of $11.40. This strategy achieves its maximum profit if the stock falls below $155.