Palantir Up Over 65% YTD, RSI Nearing Overbought as Put Option Prices Sit at Lows
Nashnova编辑部
Palantir has rallied more than 65% this year, breaking $180 intraday on August 23 — yet its RSI is brushing the overbought line while put options trade at a 52-week low, a rare pairing that suggests the market may be sharply underpricing pullback risk.
The stock keeps climbing — what is the momentum gauge saying?
Palantir's 14-day RSI hit 69.50 intraday on August 23, just below the widely watched 70 overbought threshold.
RSI (Relative Strength Index — a gauge of how aggressively a stock has been rising in the short term) is not a precise sell signal; strong names can stay overbought for weeks.
This means → an RSI near 70 tells you the current price already has a lot of good news baked in. Further gains need fresh catalysts to fuel them.
Why are put options abnormally cheap?
According to CNBC's PutDex index, Palantir's standardized 30-day put price sits in the lowest decile of its 52-week range.
In plain terms = the contracts institutions normally buy as "insurance" against a big drop are trading at their cheapest in nearly a year — while the stock is near its yearly high.
Normally a big rally draws in put buyers, pushing protection costs up. Palantir shows the opposite — equivalent out-of-the-money calls actually cost more than the corresponding puts.
This reflects a market mood that has tipped into extreme euphoria: almost nobody is willing to hedge the downside.
What does this "cheap insurance" look like in practice?
Using the August 23 intraday price of $180.85 as a reference: a September 25 expiry put at a $170 strike costs roughly $5.90 per share ($590 per contract) — that is the maximum loss.
The position turns profitable if the stock is below $164.10 at expiry (about 9.2% below the current price).
A spread version — buying the $170 put and selling a $155 put — cuts the net cost to roughly $3.60 ($360/contract), with a maximum gain of $11.40, realized if the stock is below $155 at expiry.
What is the core logic behind this trade?
CNBC is explicit: this is not a bet that Palantir will crash.
The framework is: price reflects a perfect scenario + momentum nears overbought + the options market underprices a pullback → all three conditions stacking makes downside protection unusually good value.
In plain terms = it is not saying the stock will fall — it is saying the insurance for "what if it does" is remarkably cheap right now. When the market offers cut-rate protection on a fully stretched name, that price tag deserves a serious look.
Content is for reference only, not financial advice.