Reddit User Loses Life Savings on Palantir Options

Bryant Le

Many individual investors — many of them, followers of a popular, juvenile Reddit page called Wall Street Bets — have gambled their savings for the chance of massively beating the stock market. Although Wall Street Bets is subreddit where participants discuss stock and options trading, it has become notable for its colorful and profane jargon, aggressive trading strategies, and for playing a major role in the Gamestop short squeeze.

One reddit user, u/Imzyfed stated that they lost their life savings: this user bet ~$40,000 and has already lost $25,000+ on Palantir call options, some of which will be expiring on December 17th. (Post can be found here. I am simply writing about an event that happened on Reddit.)
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Palantir Technologies Inc. is a software company that builds data platforms for organizations with complex and sensitive data environments such as for building safer cars and planes, discovering new drugs, and combating terrorism. More importantly, this stock has always been a favorite with Wall Street Bets investors since it was first released to the public in September 2020.

Palantir first came into the radar for Wall Street Bets investors when the share price broke out of a penant, from a technical analysis point of view, on 22 January 2021. The share price went from $25.90 to highs of $45.00 within 2 to 3 days. (This was a 74% increase investment!)

However, since this breakout, the price of Palantir has been steadily declining with the most recent price is $18.64, which is a decrease of ~60% from PLTR's all time highs.

Unfortunately for u/Imzyfed, not only did this user buy call options, but this user also borrowed money, margin, to continue buying shares. This combination not only cost the user $25,000+, but also this user's buying power shows that their account is deficit and that the user is being margin called.

As a reminder, invest with what you can lose. And none of what I provide is financial advice.

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