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June 5th,
2025
Edition

SPX Monthly Chart

On the S&P’s chart, May
2025’s close above the
10-month simple
moving average line
started its latest ‘Buy
Signal’. This week, we’ll
look at a stock
purchase, an option
purchase, and two debit
spread positions.

KT
The first profit opportunity we will review this week is a stock purchase in KT, or KT
Corporation. KT is South Korea's first telecommunications company and is a major
supplier of the local landline and broadband internet market.
KT Monthly Chart
The monthly chart
shows that KT has been
in an overall bull trend
for the past year. The
current buy signal was
activated when KT
closed above the 10-
period simple moving
average line in May
2024.
 KT Daily Chart
The daily chart shows that
KT has been forming a
pattern of higher highs and
higher lows for almost a
year. The bullish pattern
points to a further advance.
We recommend buying KT
stock at the current price
level. The KT dividend
yield is 3.79%.

CSCO
The next profit opportunity we will review this week is a call option purchase in
CSCO, or Cisco Systems Inc. CSCO is an IP-based networking company offering
products and services to service providers, companies, and consumers.
CSCO Monthly Chart

The monthly chart shows

that CSCO closed above the
10-month simple moving
average line and triggered
the current buy signal in
August. At that point, the
stock price was 50.54. The
current price is 64.62. The
next targets are 70 and 75
in the bullish trend.
The daily chart shows that CSCO was very bullish into 2025 until the February high.
After a deep pullback, the bulls are back in control and a further advance is
expected.
CSCO Daily Chart
As we said above, we want
to buy a call in CSCO. We
will first look at selecting a
call option strike price for
purchasing a CSCO call.
CSCO is currently trading at
64.75. Let’s look at buying
the CSCO July 18 57.5-Strike
Call. The July 18 options
expire in 42 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 0.45 points (boxed in red). The time value of 0.45 is less
than 1% of the 64.75 price, so this strike price qualifies under the 1% Rule.

The bottom row lists the

Buy to Open the CSCO Jul 18th 57.5-Strike Call percent return profit
potential. We can see
that if the CSCO stock
price moves by 1% at
option expiration (boxed
in green) a 2.6% or $20
profit will be realized.
This confirms the 1%
Rule of at least breaking
even or profiting with
only a 1% movement in
the stock price.
There is no limit on the
profit potential of a Call Buy to Open the CSCO Jul 18th 57.5-Strike Call
Option purchase if the
underlying stock/ETF
continues to decline in
•
price. If CSCO moves by -
10% between now and
option expiration, the
Call Option Purchase
Calculator shows that the
CSCO Jul 18th 57.5-strike
call will realize a 78.2% or
$602 profit (boxed in
green).

On the other hand, if CSCO remains flat at option expiration, the 57.5-Strike Call will
only lose -5.8% or -$45. Remember, if you purchase an at-the-money or out-of-the-
money option and the underlying stock/ETF is flat or down 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 CSCO Jul 18th 57.5-Strike Call at the current price
level.

PANW
The next profit opportunity we will review is a Call Debit Spread in PANW, or Palo Alto
Networks, Inc. PANW offers network security solutions to enterprises, service
providers, and government entities worldwide.
PANW Monthly Chart

PANW was trading below 30 in 2020.

On the stock’s monthly chart we can
see a one month ‘Sell Signal’ before the
bullish signal resumed in April 2025.
The current price is 197.11. The next
targets are 210 and 220 for PANW.
 PANW Daily Chart

The daily chart shows that

PANW has been going almost
straight up since the April
low. There are no signs of a
peak in the movement.
We are going to review a Call
Debit Spread trade for PANW.
Traders who want a more
leveraged approach can buy
PANW calls.

Buy to Open the PANW Aug 15th 175-Strike Call

Sell to Open the PANW Aug 15th 180-Strike Call
We can see from
this Option
Spread Analysis
that if the PANW
stock price
decreases by -5%,
remains flat, or
increases in price
when the options
expire, the
spread will make
a 29.2% or $113
profit. If PANW is
down -7.5% at
expiration the
spread can still
profit 29.2%.

TOST
The last profit opportunity we will review is in TOST, or Toast Inc. TOST builds
software which helps restaurants manage ordering, operating an on-demand delivery
network, and integrating payments.
TOST Monthly Chart The monthly chart shows that
TOST closed above the moving
average line and generated the
current buy signal in February
2024. At that time, the stock
price was 23.00. Looking at TOST
now, the current price is 42.82
with the next targets being 46
and 50.
The daily chart shows that TOST
is poised for an upside-breakout
after six months of sideways
trading.

Also, TOST had a big gap up on TOST Daily Chart

May 5. There’s an old market
adage that says to trade in the
direction of wide range gaps,
especially when they’re in
synch with the trend.
We are going to review a Call
Debit Spread trade for TOST.
Traders who want a more
leveraged approach can buy
TOST calls.

Buy to Open the TOST Aug 15th 34-Strike Call

Sell to Open the TOST Aug 15th 39-Strike Call

We can see from this Option

Spread Analysis that if the
TOST stock price decreases by
-5%, remains flat, or increases
in price when the options
expire, the trade will make a
29.9% or $115 profit. If TOST
decreases by -7.5%, the trade
can still make 29.6% or $114.
P8 #y

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This week we recommended the following:

Buy KT Stock
Buy to Open the CSCO Jul 18th 57.5-Strike Call
Buy to Open the PANW Aug 15th 175-Strike Call
Sell to Open the PANW Aug 15th 180-Strike Call
Buy to Open the TOST Aug 15th 34-Strike Call
Sell to Open the TOST Aug 15th 39-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!