Traders who successfully made money shorting Tesla are now targeting this high flyer.

Tesla’s bearish regime, which we warned of ahead of Wednesday’s report, has accomplished most of what it could have done. There are two ways forward. You can either bank the entire profit or apply the same strategy to another name with a perfect price that will be reported within two weeks.

heading towards teslaIn my second quarter report, I argued that risks were skewed to the downside. Selling and meeting deadlines was a classic way to convey expectations that “we set the price for perfection.” Revenues were significantly higher at $28.2 billion, up 26% year over year, but adjusted earnings per share were 34 cents, well below consensus (50 cents). Operating margins compressed to 1.4% and free cash flow became negative due to a 142% jump in capital expenditures. The combination of disappointing EPS and calls for patience with robotaxi (a pattern for Tesla) sent the stock down about 14.5% through a short put strike on Thursday, closing near its trading target. Investors are apparently more interested in the “show” than the “announcement” of Tesla’s earnings.

Now we come to a less glamorous but more important part of trading: what to do when a position works. Our bearish structure has captured most of its maximum potential. If most of the expected profit is already in your pocket, the calculations will be against you. The gain is minimal compared to what you could get back if the stock price rebounded sharply (which I think is highly unlikely). Therefore, some reasonable methods remain.

Method 1: Run away with the money. Close the position to secure the gain and wait for the next thick pitch. There’s nothing wrong with this. There’s an old adage in investing: “You can’t lose money to make a profit.” Sure, it’s a cliché, but I’ll save a more nuanced approach for another day.

Method 2: Bank and press most of the way. Let’s play a similar game with “house money.” Be a little more courageous and reallocate some of the profits to another high-multiplier pioneer. It is easy to be disappointed by the company’s valuation and price trends. Palantirreported on August 3rd.

Palantir is a great company and actually one of my favorites. However, some counterpoints are worth incorporating into print. The ambitious goal of growing revenue 10x without increasing sales force is philanthropically ambitious. Competition among LLM providers is likely to increase, with enterprise customers increasingly looking to deploy large-scale language models directly rather than via intermediary platforms. The overall addressable market, while large, is finite, and international sales may be restricted due to the natural preference for domestic vendors when national security concerns are concerned.

The numbers were good, but the last quarter wasn’t as good. Commercial backlog growth slowed to 12% in the first quarter from 21% in the fourth quarter of 2025, according to Bloomberg. And even after discounting recent declines, Palantir still trades at a significant premium relative to its software peer group and well above the company’s historical EV/Sales average.

For context, Palantir’s average volatility from one week before closing (roughly the current situation) to two weeks after (corresponding to the typical expiry in August) is about 26%.

The options market is pricing in 9.5% daily earnings volatility, which is higher than the past four quarters but significantly lower than the long-term average of more than 14%. This suggests that August options may be expensive as the implied volatility appears to be 65%. This can be a reasonable price, especially if you use a spread and sell one expensive option against another to neutralize the volatility premium.

So what should we do?

Step 1: Close your TSLA position — sell the August 360/330 put spread at ~$23, well over twice the price you offered it at.

Step 2 (for those in a hurry): Use some of your TSLA proceeds to buy PLTR on the August 21st $120/$95 put spread for about $6.50.

Risk is defined against paid debits.

Maximum Profit: $25 spread minus debit if PLTR ends below $95 at expiration. This is in line with the previous three-week earnings window and represents a decrease of approximately 23% from current levels.

The $95 short put effectively offsets the 65% volume premium built into the long strike.

As with Tesla trading, Palantir’s put spreads have distinct risks, and for those using the proceeds from Tesla winners, it will be less than the “house money” (profit) collected on the initial trade.