Palantir Options Point to a Mid-Term Bounce — A Practical Long Swing Setup

Hook / Thesis

Palantir (PLTR) is forming a technical base at the confluence of short-term support while trading well below the 20- and 50-day moving averages. That configuration often precedes a squeeze higher when news catalysts and active short interest combine — a pattern the options market tends to front-run via call-side activity and skew. Given recent headline wins for the company and elevated trading volumes, the intermediate-term trade here is to position for a tactical long over the next 45 trading days, while respecting the stock's stretched valuation and momentum profile.

Put simply: price is near the short-term moving average and momentum indicators are reset low enough to offer asymmetry for a defined-risk bullish swing. The path higher is not guaranteed — MACD remains bearish and the 20-day/50-day moving averages are overhead — but the mix of fresh enterprise wins and pronounced short interest make a measured long trade appealing for the mid-term (45 trading days).

What Palantir does and why the market should care

Palantir builds enterprise and government data platforms that act as operational centers for customers across defense, intelligence, healthcare, energy, and finance. The company's Foundry and AIP products are designed to integrate massive datasets and deliver analytics and operational decisioning. Those capabilities have obvious leverage in the current macro cycle where customers prioritize AI-enabled data infrastructure.

Investors care because Palantir has turned the corner financially: revenue momentum and profitability have improved materially, and the company has started to harvest record contracts. Recent reporting shows revenue doubled between 2024 and 2025 to about $4.48 billion with $1.63 billion in net profit, underscoring a real fundamental upgrade from earlier years.

Technical picture and what the options market implies

Key technicals (derived from market data):

• Current price: $135.35.
• Short-term trend: 10-day SMA is $135.25; 9-day EMA is $136.93.
• Medium-term resistance: 21-day EMA at $146.73 and 20-day SMA at $147.40.
• Longer-term resistance: 50-day SMA at $168.08 and 50-day EMA at $159.89.
• Momentum: RSI ~ 37 (on the low side but not deeply oversold). MACD line is negative at roughly -10.62 with a slightly lower signal at -10.12, which places the MACD histogram modestly bearish.

The raw technicals show price sitting right on the short-term moving average band, with meaningful resistance between $147 and $160. Volume is active: today's volume ran ~59.7M shares versus a two-week average near ~66.8M and an average of ~51.5M (recent measured average), meaning the market is paying attention and trading is robust. Short-volume reads recently show large absolute short activity (e.g., ~13.5M short-volume on 02/18/2026 of ~30.8M total), which implies that short sellers are active and short covering can amplify upside moves when catalysts arrive.

Options traders typically anticipate this environment by positioning in the intermediate-term: buying calls or constructing call spreads for a rally, or selling premium on the put side when they want to own exposure with defined risk. Although we don't have the option chain printed here, the on-balance market behavior (elevated volume, concentrated short interest, and recent positive government/commercial news) is consistent with a call-favoring tilt in the options complex. In practice, that means an outsized move higher is a reasonable low-probability but high-impact scenario to plan around — and it is exactly the type of scenario where a defined-risk long swing makes sense.

Valuation framing

Palantir is priced for significant growth. Market cap sits around $326.7 billion while trailing P/E (per the snapshot) is north of 200x and other valuation metrics such as price-to-sales and price-to-free-cash-flow are elevated (P/S ~ 72x, P/FCF ~ 153x). Those are premium multiples even after factoring in recent profitability and a doubling of revenue year-over-year to about $4.48 billion.

Put another way, the company needs sustained growth and multiple expansion to justify current levels. That raises the bar for any bullish thesis and argues for using defined-risk, mid-term trades rather than open-ended buys. If Palantir continues winning high-value government and commercial contracts and can show scalable AIP deployments, the market can rationalize higher multiples. Until then, volatility should be expected and position sizing must account for valuation risk.

Catalysts to watch (near-term to mid-term)

• DISA authorization and government procurement momentum (reported 02/19/2026) - streamlines defense procurement and broadens addressable market.
• Rackspace partnership to operationalize Foundry and AIP (reported 02/19/2026) - could accelerate enterprise deployments.
• Quarterly contract announcements and large deal signings - continued record contract values would validate growth expectations.
• Broader AI infrastructure sentiment (sector-level catalysts) - strength in infrastructure names often spills into software analytics plays.

Trade idea (actionable)

Thesis: Buy a tactical stock position for a mid-term swing on the expectation that headline-driven rallies combined with short-covering and a reset in momentum will lift PLTR into the $150s within the next 45 trading days.

Rationale for levels:

• Entry at $134.00 is a slight discount to today's price and right inside short-term support (10-day SMA ~ $135.25), offering a better risk entry than buying at the intraday high.
• Target of $160.00 sits below the 50-day SMA/EMA cluster (~$159.89 - $168.08) and represents a realistic mid-term upside that captures a reclaim of the 21-day/50-day bands if momentum flips.
• Stop at $118.00 keeps risk defined. This level is below the recent consolidation and leaves room for normal intra-swing volatility while protecting against a breakdown that would invalidate the base-building thesis.

Position sizing: risk no more than 2% of portfolio on the trade. With an entry at $134 and a stop at $118, the per-share dollar risk is $16. Size accordingly so that the total capital at risk does not exceed your 2% allocation cap.

Risk framing and possible failure modes

• Valuation compression: With P/E and P/S extremely rich, any miss on growth or margin guidance can trigger a market re-rating and sharp downside.
• Momentum remains negative: MACD is bearish and price is under the 20/50 day averages — a renewed washout could blow past the stop and accelerate selling.
• Execution risk on deployments: Partnerships (e.g., Rackspace) and new government approvals require implementation. Failure to ramp deployments could temper investor enthusiasm.
• Sector / macro shock: AI euphoria is a double-edged sword; a broad tech selloff or tightening in risk appetite would hit PLTR hard given its growth multiple.
• Options/gamma-driven volatility: Heavy options positioning can amplify intraday moves both up and down. That increases the chance of stop-outs on sharp whipsaws.

Counterargument: The technicals argue that the path of least resistance remains lower until PLTR clears the 21-day EMA (~$146.73) and the 20-day SMA (~$147.40). If the market fails to find follow-through on positive headlines, options traders may instead favor downside hedges, and a sell-off could quickly push the stock back toward the lower consolidation range. Given high valuation, the stock is vulnerable to even small misses in execution or revenue guidance.

What would change my mind

• I would abandon the long mid-term view if PLTR breaks and closes below $118 with elevated volume, which would indicate a structural failure of the base.
• I would increase conviction and add size if the stock clears the 21-day EMA and 20-day SMA on strong volume and if open interest in the options market shows a clear call-side bias over multiple expiries.
• I would shift to neutral/short if revenue growth or contract metrics disappoint materially on the next earnings or guidance and the market reaction shows sustained selling pressure.

Conclusion

Palantir offers a compelling tactical long for the mid-term because price is sitting at short-term support, trading volumes and short activity are elevated, and fresh government and commercial wins provide credible upside catalysts. That said, the company trades at a premium and momentum is not yet decisively bullish. For traders looking to capture an options-fueled rebound, a defined-risk long (entry $134, target $160, stop $118) over 45 trading days balances upside potential with valuation and momentum risks.

If catalysts continue to line up and price clears the $147-$160 resistance zone on above-average volume, the trade becomes a longer-term position candidate. Conversely, a decisive break below $118 would force a rethink.

Trade plan summary: Enter long at $134, risk to $118, target $160, mid-term (45 trading days). Watch volume, the 21-day EMA ($146.73) and any sustained shift in options open interest as confirmation.