Palantir Technologies $PLTR ( ▲ 0.8% ) has been dragged down with the broader software selloff, slipping below its 200 day moving average and heading into earnings at some of its weakest technical levels in months. With expectations cooling and sentiment already bruised, one strategist sees the setup for a sharp rebound if results or guidance surprise to the upside.
When Bad News Is Already Priced In
Dean Curnutt of Macro Risk Advisors points out that Palantir rarely looks this washed out just before reporting. In past quarters where the stock fell in the days leading into earnings, the following week often delivered powerful upside moves. The logic is simple. If positioning is light and expectations are low, it does not take a perfect report to spark aggressive buying.
The Trade Structure
The suggested strategy is a bullish call spread. Buy the $162.50 calls expiring Friday and sell the $182.50 calls with the same expiration. This limits upfront cost while targeting a move higher without needing a runaway rally. At the time of the call, the risk to reward profile was estimated at about 10.5 to 1, meaning a relatively small premium outlay for the chance at a sizable payoff if Palantir pops after earnings.