Sell Cash‑Secured Puts on Palantir to Collector Yield While Neutral on the Stock

Hook / Thesis

Palantir Technologies (PLTR) is a polarizing name: a high-growth software platform with strong free cash flow and government relationships, trading at very rich multiples. The market can be choppy in the near term as investors debate how much AI-driven revenue growth is already priced in. If you want to play the bullish case without paying for shares at todays price, selling a cash-secured put near the $125 strike for a mid-term expiry is a pragmatic way to earn income and get long at a better effective cost basis.

The mechanics are simple: sell the 125 strike put and set aside the cash to buy shares if assigned. You collect premium up front, which can translate into a 15%+ annualized yield on the capital you reserve if option prices reflect current implied volatility. This is an income-first trade with a defined obligation and clear stop rules — attractive for disciplined accounts that want exposure to Palantir without immediate share ownership.

Why the market should care

Palantir builds data-integration and analytics platforms used across government and commercial clients. Its software is embedded in defense, intelligence, healthcare, energy and finance workflows where integration, operational decision-making and trust are high barriers to entry. That enterprise footprint matters because it creates recurring revenue potential and long-term contracts that can outlast short-term AI narratives.

Key fundamentals and valuation snapshot

Those are rich multiples. The companys market capitalization of roughly $323.5 billion and enterprise value near $306.7 billion reflect the markets expectations for outsized growth. At the same time, a free cash flow run-rate north of $2.1 billion gives Palantir a real cash-generative story under the growth veneer. For traders who dont want to pay full price for that optionality today, a cash-secured put converts uncertain upside into immediate income while defining the price at which youd take assignment.

Trade idea - actionable plan

Trade type: Sell a cash-secured put on PLTR at the 125 strike, mid-term expiration (roughly 45 trading days out). This is a neutral-to-bullish income trade: you either keep premium or buy PLTR at an attractive effective price if assigned.

• Entry price (stock reference): $135.28
• Put strike to sell: $125.00 (cash-secured)
• Target (management of trade / objective): $150.00 (this is the stock price level where Id stop rolling and consider taking profits or reallocating capital if the market re-rates PLTR higher)
• Stop loss (if you want to cut and manage assignment risk): $117.00
• Time horizon: mid term (45 trading days) - plan for one option cycle and re-evaluate; you can repeat if the position works.

Notes on the numbers above: the entry price listed is the current stock reference price ($135.28). The practical component of this trade is the premium you receive for the 125 strike put. The dataset doesnt include live option premiums here, so you must check the options chain in your platform. As a rule of thumb, to convert this trade into a 15%+ annualized yield on the cash you reserve, you need modest per-contract premium. For example, cash required to be fully secured at the $125 strike is $12,500 per contract (100 shares). To achieve a 15% annualized return over a 45-trading-day cycle, the premium needed is roughly $2.31 per share ( = $125 * 0.15 * 45/365 ). If you can collect that or more for the 125 strike, the math supports the headline yield target.

How to manage the trade

• Sell 1 cash-secured 125 put per 100 shares of cash you want at risk ($12,500). Collect premium up front.
• If PLTR stays above 125 through expiry, you keep the premium — your yield comes from premium relative to reserved cash.
• If PLTR falls below 125 and you get assigned, you buy the shares at $125. Your effective cost basis equals $125 minus the premium you collected. Then use the stop at $117 to limit downside if the fundamentals deteriorate materially.
• If implied volatility collapses and the put price declines meaningfully before expiry, consider buying back early to realize profit or rolling down/forward if you prefer to stay in play.

Catalysts that support this trade

• Pentagon linkage and program positioning. Palantir remains on supply lists and vendor rosters for large defense initiatives. Being a vendor on the Pentagons SHIELD list makes it a candidate for task orders that can be multi-year revenue drivers (news 02/24/2026).
• AI adoption tailwinds. Broader AI budget lift and enterprise automation can expand Palantirs commercial footprint; rotation into AI names beyond the largest mega-caps is a structural tailwind (news 02/23/2026).
• Large institutional interest and past shareholder rallies. Palantir was a notable outperformer in 2025 in some active funds, a reminder that swing momentum can re-accelerate (news 02/24/2026).
• Strong free cash flow. FCF of roughly $2.1B supports investments, defense/customer work, and gives optionality even at current valuations.

Risks and counterarguments

Primary risks you must accept or monitor when selling puts on PLTR:

• Valuation risk: Palantir trades at very rich multiples - price / sales near ~68.9x and a P/E in the 200x range. The stock already prices in very aggressive growth; a revenue or margin miss could trigger steep multiple compression and a large decline in share price.
• SaaS sector sentiment: The sector is under pressure from narratives that AI could compress traditional SaaS economics. Headlines and earnings guidance from peers have triggered sharp drawdowns in similar names (news 02/25/2026 and 02/23/2026). That can increase downside risk and inflate put premiums unpredictably.
• Governance / reputational noise: Governance headlines and insider activity can weigh on sentiment and produce episodic volatility; recent governance questions (reported 02/23/2026) have been a near-term headwind.
• Liquidity and assignment risk: if the stock gaps lower, you can get assigned and be forced to buy shares at $125; if you dont want to be a shareholder, that is an outcome you must be prepared to manage. The stock can gap below stops on macro shocks.
• Premium availability: options premiums fluctuate. If implied volatility compresses, the premium may be insufficient to reach a 15%+ annualized yield; you must verify live option quotes before executing.

Counterargument: One reasonable counterargument is that given Palantirs valuation, buying shares outright at todays price is a poor risk/reward — the stock could easily retest lower levels closer to its 52-week low (~$66) if growth disappoints or multiples re-rate. If you accept that downside path, selling puts simply increases your chance of owning the stock at a worse point; critics would argue its better to wait for clearer durability in revenue growth or a de-rating before allocating capital.

What would change my mind

I would reconsider this trade if one or more of the following occurs:

• Palantir reports a material slowdown in commercial bookings or materially weaker guidance that undermines multi-year growth assumptions.
• Free cash flow trajectory reverses and management signals an aggressive cash burn profile.
• Options market becomes thin at nearby strikes and you cannot collect sufficient premium to justify the capital at risk — specifically if the premium for the 125 put drops below the level that produces a 10% annualized yield on reserved cash.

Conclusion - stance and recommendation

My stance: neutral-to-bullish via options. Selling a cash-secured 125 put on PLTR for a mid-term expiry is an income-first, defined-obligation way to express a desire to own Palantir at a lower effective price. The trade makes sense for disciplined investors who are comfortable owning the shares at $125 and who require upfront premium to justify risk. Verify live option premiums before executing; youre looking for per-share premium in the neighborhood required to produce ~15% annualized yield on reserved capital (rough math shown above).

If premiums are thin, skip the trade. If premiums are available and you are comfortable with assignment, size the position to your portfolio and use the $117 stop (if assigned) to limit downside pain. Repeat the cycle only if risk-reward continues to make sense and catalysts improve or sentiment normalizes.

Key takeaways

• Palantir is a high-conviction, high-valuation name; selling puts converts upside optionality into immediate income.
• To hit a 15%+ annualized yield on a 45-trading-day put sale at the $125 strike, you need roughly $2.31 per share in premium — check live quotes; if you can collect that, the trade math is compelling for income-minded accounts.
• Manage assignment risk, watch earnings and sector headlines, and be ready to buy shares at $125 (less premium collected) or to buy back the put early if volatility and premium dynamics change.