Th

May 15th,
2025
Edition

SPX Monthly Chart

On the S&P’s chart, April
2025’s close continued
the bearish signal with
another close below the
10-month simple
moving average line.
With the ongoing ‘Sell
Signal’, we’ll look at a
stock, a put purchase,
and two debit spread
positions.

UTI
The first profit opportunity we will review is a stock purchase in UTI, or Universal
Technical Institute, Inc. UTI provides technical education training in automotive,
diesel, motorcycle, marine, and personal watercraft technologies.
UTI Monthly Chart
The monthly chart
shows that UTI closed
above the 10-period or
10-month simple
moving average line and
triggered the current
buy signal in June 2023.
At that time, UTI was
trading at 6.91. The
current price is 33.73.
The next targets are 40
and 45.
 UTI Daily Chart
The daily chart shows that
UTI recently posted an
upside breakout after 5-
months of sideways trading.
The dip back inside the
Keltner Channel gives us a
buying opportunity.
We recommend buying UTI
stock at the current price
level.

ZBH
The next profit opportunity we will review this week is a Put Option purchase in ZBH,
or Zimmer Biomet Holdings. Inc. ZBH designs, manufactures, and markets orthopedic
reconstructive products.
ZBH Monthly Chart

The monthly chart shows

that ZBH has been in an
overall bear trend since the
2023 high. The next
downside targets are 85 and
80.
The daily chart shows that ZBH recently posted a downside breakout after a 10-
month period of sideways trading. A further decline is expected.

ZBH Daily Chart

As we said above, we want
to buy a put in ZMH. We will
first look at selecting a put
option strike price for
purchasing a ZBH Put. ZBH
is currently trading at
96.73. Let’s look at buying
the ZBH June 20 110-strike
put. The June 20 options
expire in 35 days.

The Option Purchase calculator will calculate the profit potential for an option
purchase trade based on the price change in the underlying stock/ETF at option
expiration in this example from a 12.5% change in stock price to a flat stock price.
We developed what we call the 1% Rule to help us select an option strike price. The 1%
rule says to limit the time value portion of the option to less than 1% of the stock/ETF
price. If you limit the time value portion of an option to 1%, the stock price only
has to move 1% for the option contract to break even and start profiting.
The calculator will also calculate the time value portion of an option. With this option
purchase, the time value is 0.23 points (boxed in red). The time value of 0.23 is less
than 1% of the 96.73 price, so this strike price qualifies under the 1% Rule.

The bottom row lists the

Buy to Open the ZBH Jun 20th 110-Strike Put percent return profit
potential. We can see
that if the ZBH stock
price decreases by 1% at
option expiration (boxed
in green) a 5.5% or $74
profit will be realized.
This confirms the 1%
Rule of at least breaking
even or profiting with
only a 1% decrease in the
stock price.
There is no limit on the
profit potential of a Put Buy to Open the ZBH Jun 20th 110-Strike Put
Option purchase if the
underlying stock/ETF
continues to decline in
•
price. If ZBH decreases by
-10% between now and
option expiration, the Put
Option Purchase
Calculator shows that the
ZBH June 20 110-strike
put will realize a 69.9% or
$944 profit (boxed in
green).

On the other hand, if ZBH remains flat at option expiration, the 110-Strike Put will
only lose -1.7% or -$23. Remember, if you purchase an at-the-money or out-of-the-
money put option and the underlying stock/ETF is flat or up at option expiration, it
could result a 100% loss for your option trade! Using the 1% Rule to select an option
strike price can increase your percentage of winning trades compared to trading at-
the-money or out-of-the- money strikes and this higher accuracy can make you a more
successful trader.
We recommend buying the ZBH Jun 20th 110-Strike Put at the current price level.

SPOT
The next profit opportunity we will review is in SPOT, or Spotify Technology S.A. SPOT
provides music streaming services. The Company offers commercial free music and
ad-supported services to subscribers. Spotify Technology S.A. is based in Sweden.
SPOT Monthly Chart

Some charts make you say WOW! SPOT

generated the current buy signal when
it closed above the monthly moving
average line in January 2023 with the
stock price at 112.72. This year’s high
is over 650.
 SPOT Daily Chart

The daily chart shows that the

SPOT stock price has doubled
since the August low. The
next targets are 675 and 700.
We are going to review a Call
Debit Spread trade for SPOT.
Traders who want a more
leveraged approach can buy
SPOT calls.

Buy to Open the SPOT Jun 20th 580-Strike Call

Sell to Open the SPOT Jun 20th 590-Strike Call
We can see from
this Call Option
Spread Analysis
that if the SPOT
stock price
declines by -5%,
remains flat, or
decreases in
price when the
options expire,
the spread will
make a 29.9% or
$230 profit. If
SPOT is down -
7.5% at
expiration the
spread can still
profit 29.9%.

LB
The last profit opportunity we will review is in LB, or LandBridge Company LLC. LB
owns and manages land and resources to support and enhance oil and natural gas
development principally in the United States.
LB Monthly Chart

The monthly chart shows that LB

just started trading last June. It
went almost straight up from
June until January. It’s been
going sideways since then.
Sideways trading in a bull trend
is usually followed by a further
advance.

LB Daily Chart
The daily chart shows that LB
was very bullish late last year.
After a long pause, an upside
breakout appears to be
imminent.
We are going to review a Call
Debit Spread trade for LB.
Traders who want a more
leveraged approach can buy LB
calls.

Buy to Open the LB Jun 20th 65-Strike Call

Sell to Open the LB Jun 20th 75-Strike Call

We can see from this Option

Spread Analysis that if the LB
stock price decreases by -5%,
remains flat, or increases in
price when the options expire,
the trade will make a 29.9% or
$230 profit. If LB declines by -
7.5%, the trade can still make
29.9% or $230.
P8 #y

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This week we recommended the following:

Buy UTI Stock
Buy to Open the ZBH Jun 20th 110-Strike Put
Buy to Open the SPOT Jun 20th 580-Strike Call
Sell to Open the SPOT Jun 20th 590-Strike Call
Buy to Open the LB Jun 20th 65-Strike Call
Sell to Open the LB Jun 20th 75-Strike Call

Note: Profit performance displayed in this newsletter does not include commission
cost. Prices are based on Thursday End of Day unless the market is closed.

We’ll see you next

week!