Palantir's 37% Slump From ATH Boosts Appeal of Put Options as Insurance

$Palantir Technologies Inc.(PLTR)$  's 37% share slump from its all-time high reached in November has spurred increased trading in put options that could shield investors from further losses. 

The total volume on put options that give their holder the right to sell Palantir shares were about 1.09X the volume on call options which give their holders the right to buy the shares. That put-call ratio is higher than the average of 0.74 over the past year. 

Put options volume totaled 294,100 contracts Tuesday. While that's down from 443,974 put options Friday, it's still higher than the total call options volume of 269,310 contracts, according to exchange data.

Investors and large speculators have increased their trading in Palantir options amid a sell-off in software stocks that has seen the S&P North American Expanded Technology Software Index tumble almost 30% from its peak in September. Palantir is the second-largest holding in the index, behind $Microsoft(MSFT)$  . 

The stock has also been targeted by famous short seller Michael Burry, who expressed concerns over the AI-powered software company's valuation and growth potential. DA Davidson analysts defended Palantir, saying Burry is "minimizing individual investors and their perspective."

DA Davidson analysts also said artificial intelligence and large language models don't pose a threat to Palantir. "Quite the contrary, the very reason Palantir is doing so much better than any software company is that Palantir is the rate company actually helping its clients achieve value from its AI in its mission critical systems," analysts Gil Luria and Lucky Schreiner wrote in a copy of their note to clients that was posted by a social media user on x.com. 

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