Palantir - The short signal from the PitchforkPalantir is great for trading with the Alan Andrews Pitchfork.
Palantir follows the Pitchfork rulebook very accurately. This builds confidence, helps me stick to my trading plan, and ultimately leads to solid profits.
This time, Palantir gave me a new signal to the short side. Since I like to play this with LEAP options, I bought two ITM puts and sold one OTM put to harvest some theta if the market goes sideways.
A LEAP with a delta above 70 does not really lose much value if price goes sideways or drifts down.
From a psychological perspective, this structure is excellent for me. I know I have time in this trade, I can execute my plan, and my capital is not exposed to unnecessary risk.
A word about the 2:1 ratio:
The benefit of buying two options while selling only one is that it leaves the door open for larger profits. If price moves deep ITM on the sold put, there is still one long put that can continue to print money.
But what if price trades back into the pitchfork?
In that case, the sold put offsets part of the losses. With this mechanism in place, I can withstand a drawdown even longer.
So it is, in a way, the best of everything:
I get exposure to Palantir
I limit and hedge my risk partially
I have plenty of time with the LEAPs
I keep the door open for substantial profits
All in all, a good trade to pick up with a fork.
Happy weekend to you all and don't forget to check my Profile settings to the right.
