How To Trade PLTR Being Added To The S&P 500

Palantir Technologies (PLTR) is in the news after Friday’s announcement that the stock is being added to the S&P 500 index.

No wonder – inclusion into the S&P 500 has triggered automatic buying, as index funds and others who have to match the S&P 500 are now forced to add PLTR stock to their portfolio.

As I’m writing this, the stock is trading at about $34.50, down slightly for the day after a huge, 14% runup since the Friday announcement. But this is far from the end of the stock’s movement.

Here’s where PLTR is going next, and how to trade it…

Looking at the positioning of options traders, as part of my “PFP” (Price action, Flows, Positioning) system, I can see that the highest call strike with any significant open interest, or the Top Call Strike (TCS), is $35.

To put it simply, that means PLTR isn’t going much higher than $35, because there are not currently enough traders positioned to push it above that limit.

On the other hand, there’s strong support from options traders in the $31-$32.50 range. If PLTR falls there, traders will step in to prop it up.

However, in the slightly longer term, I’m seeing very heavy call positions into the September options expiration on the 20th. The play then is to wait for a pullback and go long into September’s or October’s options expirations, and let the heavy traders push your trade up.

For more insights from the day’s options flow data Come check out my Options Flow Cheat Sheet

Photo via Shutterstock