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[9/31] My PALANTIR LEAP CALL Options Up 4X | WHAT NOW? | $PLTR Ultra Bull or Conservative Strategies - YouTube
Channel: Mindful Investor
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okay yesterday i received a聽
comment from one of the subscribers聽聽
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homiebadger he said "when聽
would you sell your leaps聽聽
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i'm having a hard time coming with a good exit聽
strategy because i got some palantir leaps and聽聽
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the more i wait the lesser the option value聽
will be". first of all thanks for commenting聽聽
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it really helps the channel grow and then second聽
of all it really got me thinking because i never聽聽
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really thought of the exit strategies but i have聽
them in the back of my mind. it's always nice to聽聽
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have the plan on paper because like they say聽
failing to plan is planning to fail right? so聽聽
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my response for homiebadger here is that it really聽
depends... and this isn't a generic answer because聽聽
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ultimately everyone's answer would be different,聽
there wouldn't be a one-size-fits-all answer here.聽聽
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in my opinion it depends on the couple聽
factors, its how much conviction you have聽聽
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in the stock like what is the realistic target for聽
this palantir stock? do you think it will actually聽聽
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hit the moon to $100 dollars within the next聽
couple years or do you think it's over hyped right聽聽
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now because it jumped three times in one month.聽
i'm sure there are people on both these boats聽聽
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so which one are you? one of the easiest ways to聽
test how much conviction you have in the stock聽聽
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is that imagine the stock price tanked聽
50% down. so from about $27 to $13.50聽聽
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in the next couple weeks what would you do?聽
if the answer is i'm getting the hell out of聽聽
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there i'm deep in the red right now... then聽
maybe your conviction isn't so strong. If we聽聽
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say the price will be $100 in a couple years聽
so if we really truly believe that then any聽聽
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price under $100 would be a discount right? so聽
if it dropped to $13-14 that means there's more聽聽
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upsides to it and it may be an opportunity to聽
buy more and then number two: your entry points
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when did you buy these stock options did you聽
buy it when it was 10 15 20 or 25 or even 30聽聽
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because each of those points you would react聽
differently. for myself i entered really really聽聽
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early like around $10 i think my average is聽
a little bit above $10 right now at $11.31聽聽
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because i sold some puts and then sold some聽
calls so it blended together to be about $11.聽聽
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for myself since i have that much聽
of a buffer i didn't make any moves聽聽
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even when the stock tanked to about聽
like $22-23 last week i just sat still聽聽
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because of the huge buffer. even at $22 i was up聽
100% and then there's number three: bet sizing
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like how much are you invested in the stock does聽
it represent like 20% or 50% of your portfolio?聽聽
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if that's the case and the amount kind of affects聽
your lifestyle so that when the stock moves like聽聽
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up or down 5-10% you'll be emotionally attached聽
then the best sizing may be a little bit high.聽聽
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the easy gauge is that how well do you sleep聽
at night... if it's a moderate amount then聽聽
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you won't care about these 10-20% fluctuations聽
and then there's number four: your time frame.
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if you're just planning to hold聽
the stock for a couple months聽聽
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it may be time to take the profits and get out聽
because you did double your money for the past聽聽
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month and as i always say, it is never wrong to聽
take profits off the table because once it's off聽聽
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the table then you can invest that into other聽
opportunities and go from there. by not taking聽聽
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anything off the table let's say if your money聽
doubled you're essentially parlaying your bets聽聽
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so anything would be magnified, either up聽
or down. everything would be doubled right聽聽
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now... if this was a true investment like my聽
dividends portfolio or my growth portfolio聽聽
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i haven't looked at the stock price for the聽
last couple months because i'm in it for like聽聽
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5-10 years so the short-term fluctuations聽
really doesn't matter for me so we need to聽聽
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determine if we're speculating or investing. we're聽
speculating then it's never wrong to take profits聽聽
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if we're investing then we just buy more when聽
the stock goes down. Alright now let's look聽聽
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at a couple strategies okay number one:聽
let's say if you're really conservative.
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something that you may consider doing is taking聽
your original amount off so essentially selling聽聽
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your original dollar amount let's say if you're聽
in for $5,000 and right now is worth $20k or $15k聽聽
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right now then we sell $5000 of it and just put聽
in our pockets. so sell original dollar amount
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and what do we do with the rest of it? if we聽
were still convicted then we would sell these聽聽
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options and move it to a further date because聽
the time decay is eating into our option premiums聽聽
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day by day. so we will have these聽
current option contracts right now聽聽
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we'll sell it and move it to聽
something in the future maybe in 2023
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and we're going to buy some of those contracts聽
and by doing this move with the leaps聽聽
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you can also take some off the table as聽
well because if your premiums here were $10聽聽
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and you bought something out for $8 then聽
you're capitalizing $200 per contract
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while you buy more time... and聽
what kind of premiums are we buying聽聽
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that again falls back to how convicted you聽
are if you're the ultra bull it's gotta be聽聽
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something out of the money the stock right now聽
is at $27. we buy something in the $35-40-50聽聽
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range even depending on how bullish you聽
are and that was a play for the ultra bulls
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and then what these ultra bulls may do is聽
that they'll sell these contracts right now聽聽
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and buy something at the highest premium and the聽
furthest date out because they're planning to hold聽聽
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it for two or three years and maybe continuously聽
do these actions once it hits that premium they聽聽
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put. let's say if they buy the $60 premiums by聽
2023 and when it reaches $60 they'll sell it
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and move it outwards to a $100 out in 2024聽
or 2025. they'll just keep on doing this聽聽
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and this action. it's called letting it ride聽
so they're not taking anything off the table聽聽
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and they're just putting it all in. it all falls聽
back on how much conviction you have on the stock聽聽
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and the bet sizing and such we talked聽
about but always remember this it's聽聽
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never wrong to take profits off the table聽
and in fact i'm going to do it right now.
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okay so here are my palantir positions i聽
have 6500 shares and then these long call聽聽
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options for january 2022 at $20 has gone up four聽
times plus so for me i'm going to take some off聽聽
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the table and throw it a little bit further聽
out. okay right now the option is about $13聽聽
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i'm going to roll it i'm going to roll聽
it further out to 2023 and uh maybe $35聽聽
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strikes because i already have some positions聽
there and i want to keep it like consolidated.聽聽
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what i'm doing is rolling roll position to聽
2023 and about $35 calls so right here $35 call聽聽
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2023 roll option. okay as i mentioned before聽
it shows the negative because what i'm buying聽聽
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in the future it costs less than what i'm聽
selling. so i'm gaining a credit as well.聽聽
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i'm taking a little bit of money off the table聽
while buying more time... something in-between聽聽
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as i mentioned it may be hard to pull off because聽
they're simultaneously doing two moves at the聽聽
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same time i'm just gonna do five contracts,聽
credit of $90 so i get a credit of $450.聽聽
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we'll try to execute it and see what happens...聽
order filled so we see this position we have for聽聽
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jan 2022 $20 call has dropped five contracts聽
while this one the jan 20 2023 $35 contract聽聽
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has gone up by five. what my play is for palantir聽
is try to remain about 10000 shares of exposure聽聽
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i have 6500 here with the normal shares and聽
then 20 and 15 so together that's 35 times聽聽
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100 that's another 3500 shares together there is聽
a 10,000. so another thing to consider is when to聽聽
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roll your positions... we don't do this action聽
randomly today the stock has gone up maybe 4%聽聽
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and when this stock shoots up like this the聽
premiums for something that expires a little bit聽聽
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closer definitely goes up more than something that聽
expires much further away so there is a bigger gap聽聽
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in differential and we'll take every edge we聽
can get in the options market. for instance聽聽
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when it dropped 10% yesterday these leaps in 2022聽
definitely fell more than these leaps in 2023 so聽聽
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your differential is bigger so it's out of your聽
favor so you're losing some differential there...聽聽
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anyways that was the response to homiebadger's聽
comment if you have any questions, comment down聽聽
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below and i would love to address them in a聽
later video. like and subscribe if you found聽聽
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any value in the video. thanks for watching聽
take care and i'll see you in the next one! =)
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