How To Position For A 40% Discount On Palantir Stock?

Palantir Technologies (NASDAQ: PLTR) has been one of the most explosive AI and data infrastructure plays in recent years. Since breaking out of the $20 range, the stock surged to a 52-week high of $208 before cooling off to current levels near $130. Missed the initial run? Don’t worry. There’s still a smart way to potentially profit from Palantir’s long-term trajectory, with a built-in margin of safety and returns far better than cash or bonds. With enterprise AI adoption accelerating and its defense software deeply embedded in modern military operations, investors may be pricing in too much, too soon. But what if you could get in at a 40% plus discount—say, around $75 a share? Now we’re talking.

If that price sounds like a bargain and you’ve got some dry powder, here’s a clever trade to consider.

The Trade: 12% Annualized Yield At 40% Margin Of Safety, By Selling Put Options

The strategy to achieve this involves generating a 12.5% annualized yield alongside that 40% margin of safety by selling put options. Specifically, you can sell a long-dated put option expiring on March 19, 2027, at a strike price of $75. Executing this trade allows you to collect roughly $595 in upfront premium per contract (which covers 100 shares). That premium alone equates to an 8.5% annualized yield on the $7,500 in capital you are setting aside for the possibility of buying the stock. Furthermore, by parking that cash collateral in a savings or money market account earning an estimated 4.0%, your total annualized yield is boosted to roughly 12.5%. Ultimately, you are getting paid a double-digit yield while remaining positioned for the chance to acquire Palantir at a deeply discounted $75 per share.

And here’s the kicker. You’re agreeing to buy Palantir stock at $75, a roughly 40% discount to the current market price, only if the stock drops below that level by the expiration date. Selling cash-secured puts is an established options strategy, but it requires investors to be fully comfortable with the downside exposure of being assigned the stock, and for the right long-term investors, it may be just right.

What if PLTR drops more than 40% – isn’t there some risk?

Of course, there is risk. Because there are two ways this could unfold:

1. PLTR stays above $75 on March 19, 2027: You keep the full $595 premium. That’s 7.9% extra income over the next 343 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash.
2. PLTR ends up below $75: You’ll be obligated to buy 100 shares at $75. But thanks to the $595 premium, your effective cost basis is just $69.05 per share – a roughly 46% discount from current levels. This is definitely a possibility, as we highlighted the risks in a separate analysis: Four Risks To Watch For Palantir Stock In The Next 6 Months

In short, this strategy presents two distinct scenarios, each with its own specific risk-reward profile, especially if you’re comfortable owning a high-potential company like Palantir for the long haul.

Is that a good deal, though?

It could very well be, if you consider a couple of facts:

If you do end up owning PLTR stock, you’re not stuck with some speculative stock. You’re holding a company that is:

1. A leader in enterprise AI and defense software: Palantir’s Gotham platform is deeply entrenched in the U.S. and allied military and intelligence operations. Meanwhile, its commercial platforms, including Foundry and the Artificial Intelligence Platform (AIP), are rapidly becoming the operating systems of choice for major corporations looking to deploy actionable AI.
2. Fast growing: PLTR has consistently accelerated its commercial revenue growth while maintaining high margins and GAAP profitability. As the company aggressively expands its footprint in the private sector, its growth profile remains significantly higher than the S&P 500 median of <5%.
3. May be positioned for more upside: As AI moves from the experimentation phase to actual deployment, Palantir’s unique Ontology framework provides a massive moat against generic software wrappers. The high stickiness of its government contracts, combined with a highly successful “land-and-expand” commercial strategy, offers profound long-term scalability.

And The Risk of a Crash Is Lower Than You Think

Selling puts is only as good as the business you’re willing to own. While Palantir stock trades at a premium valuation, its underlying fundamentals are exceptionally strong.

1. $7.2 billion in cash and short-term equivalents as of the end of 2025, providing a massive liquidity cushion with zero debt.
2. Backed by highly sticky revenues: Palantir secures deeply entrenched, long-term government defense contracts while rapidly expanding its enterprise footprint. U.S. commercial remaining deal value recently hit $4.38 billion, providing a highly predictable and recurring revenue stream as enterprise clients scale their AI operations.
3. Highly profitable, with net margins of 36% for the full year 2025. Generating this level of GAAP profitability alongside massive top-line growth (hitting a Rule of 40 score of 127%) is exceedingly rare in the enterprise software sector.

The Bottom Line: Margin of Safety

This trade offers an asymmetric risk-reward setup, with a built-in 40% plus discount. If the stock drops, you’ll effectively own Palantir at a cost basis around $69. That is right around the levels the stock traded at in early 2025 before its major commercial AI breakout. You won’t mind holding this premier quality name for a few years, or until it grows back to $150 levels or more, if you’re an investor with a long-term mindset. And if it doesn’t? You walk away with a roughly 12.5% annualized yield (8.5% annualized on the options sold + 4.0% on the cash set aside).

Depending on the stock price at expiration, this trade results in either retaining the premium as income or acquiring the stock at an adjusted cost basis.

Palantir’s unique Ontology framework and rapid commercial AI expansion make it a compelling long-term play, but navigating the volatility of high-growth software winners still carries risk. If you want to deploy high-conviction, data-backed strategies across your entire portfolio without managing the day-to-day execution yourself, we can help. Our Trefis High Quality Portfolio (HQ) strategy has outperformed its market benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000) to produce over 105% returns since inception.