Notable Friday Option Activity: NVDA, PLTR, COST

Palantir options traded 359,260 contracts today (~35.9M underlying shares), roughly 101.2% of its one‑month average daily volume (35.5M shares), with outsized activity in the $190 put expiring Dec 26, 2025 (33,827 contracts, ~3.4M shares). Costco options printed 28,020 contracts (~2.8M underlying shares), about 92.6% of its one‑month ADTV (3.0M shares), led by the $950 call expiring Jan 16, 2026 (3,473 contracts, ~347.3k shares). The flows indicate significant options positioning and potential near‑term volatility in both tickers, though the report is descriptive market flow data rather than company fundamentals.

Analysis

Market structure: The extreme PLTR put flow (359k contracts ~101% of ADV; 33,827 contracts at $190 Dec-2025 ~3.4M shares) signals one or a few large institutional bets or hedges that will force delta-hedging into the underlying and amplify downside if buys are net long puts. Costco's $950 Jan-2026 call flow (3,473 contracts ~347k shares; options volume ~92.6% of ADV) reads as patient, bullish conviction that will support buy-and-hold flows rather than intraday gamma. Market-makers and liquidity providers benefit from selling premium; index/ETF short-gamma risk increases modestly as these flows concentrate in single names.

Risk assessment: Tail risks for PLTR include sudden government-contract losses or major regulatory scrutiny — single-event downside >30% is plausible and would be amplified by the concentrated put position; for COST, secular consumer-discretion impact from a recession is the primary tail. Immediate (days) risk is elevated intraday volatility and directional gamma; short-term (weeks–months) outcomes hinge on earnings and contract announcements; long-term (quarters–years) depends on AI/government adoption for PLTR and membership-driven resilience for COST. Hidden dependency: large block trades can be option sells disguised as buys (structured trades), so confirm trade prints/OTC fills before extrapolating sentiment.

Trade implications: Defensive, asymmetric positions fit the flow: for PLTR prefer limited-cost bearish exposure (buy Dec-26-2025 190/150 put spread sized to 0.5–1.5% portfolio) or short 1–2% equity position entered within 7–14 days if price strength occurs. For COST, establish a 1–3% long position or buy Jan-16-2026 950 call or 850/950 bull-call spread as a 6–12 month directional play; consider long COST vs short XRT (retail ETF) for relative strength. Volatility trade: if implied vol on PLTR spikes >+40% vs 30‑day realized, sell premium via calendar spreads to capture mean reversion.

Contrarian angles: The market may be misreading concentrated PLTR puts as pure bearish conviction when they could be protective hedges for large long positions or multi-leg OTC structures — if PLTR fails to decline >20% in 30 days, implied vol should collapse and selling premium becomes profitable. Historical parallels: clustered deep-OTM option activity preceded both big directional moves and benign mean reversion depending on accompanying fundamentals; don’t assume direction without confirming block-level data. Unintended consequence: crowding into short-premium against these flows can produce violent squeezes if the underlying gaps up; size positions to avoid forced deleveraging.

Key Decisions for Investors

• PLTR: If overweight, reduce net equity exposure to ≤1% of portfolio within 7 trading days; implement a capped hedge by buying a Dec-26-2025 190/150 put spread sized to 0.5–1.5% notional to limit downside cost while retaining upside optionality.
• PLTR directional: If bearish, initiate a targeted short (or buy put spread) equal to 1–2% portfolio on rallies into implied-vol spikes; cut position if PLTR falls >20% or if implied vol compresses by >25% from peak.
• COST: Establish a 1–3% long position for a 6–12 month horizon or buy Jan-16-2026 950 calls (or 850/950 bull-call spread) sized to 0.5–1.5% notional, taking profits if COST outperforms retail peers by >10% over 3 months.