January 25th,

2024
Edition

SPX Monthly Chart

On December 29th, the
S&P posted another
end of the month
close above the
monthly moving
average line. This is a
continued bullish
signal.
Today will look at one
stock purchase, a call
purchase, and two
option debit spreads.

VIRC
The first profit opportunity is a stock purchase in VIRC, or Virco Mfg. Corporation.
VIRC designs, produces, and distributes quality furniture for the contract and
education markets worldwide.
VIRC Monthly Chart
WT
The monthly chart
shows that VIRC closed
above the monthly
moving average line
every month since July.
VIRC has nearly tripled
in price since the buy
signal was triggered.
The next targets are 15
and 17.5.
 VIRC Daily Chart

The daily chart shows that

VIRC went almost straight
up in December. The
current pause gives us a
buying opportunity.
We recommend buying
VIRC stock at the current
price level. The VIRC
dividend yield is 0.64%.

XLI
The next profit opportunity we will review this week is a call purchase in XLI, or the
Industrial Select Sector SPDR Fund. XLI seeks to provide results that, before expenses,
correspond generally to performance of the Industrial Select Sector Index.
XLI Monthly Chart

The monthly chart shows

that XLI has been in an
overall bull trend since the
2022 low. The next targets
are 125 and 135.
The daily chart shows that XLI has been mostly trading inside the Upper Keltner
Channel or higher since October. There are no signs of a peak in the movement.

XLI Daily Chart

As we said above, we want
to buy a call in XLI. We will
first look at selecting a call
option strike price for
purchasing an XLI Call. XLI
is currently trading at
113.61. Let’s look at buying
the XLI March 15 100-Strike
Call. The March 15 options
expire in 50 days.

The Call Option Purchase calculator will calculate the profit potential for a call 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 0.64 points (boxed in red). The time value of 0.64 is less
than 1% of the 113.61 stock price, so this strike price qualifies under the 1% Rule.

The second row from

bottom of the calculator
Buy to Open the XLI Mar 15 100-Strike Call
lists the dollar profit
potential. The bottom row
lists the percent return
profit potential. We can see
that if the XLI ETF price
increases 1% at option
expiration (boxed in green)
a 3.5% or $50 profit will be
realized. This confirms the
1% Rule of profiting with
only a 1% increase in the
stock/ETF price.
 There is no limit on the Buy to Open the XLI Mar 15 100-Strike Call
profit potential of a call
option purchase if the
underlying stock •
continues to increase in
price. If XLI increases 10%
between now and option
expiration, the Call Option
Purchase Calculator shows
that the 100-strike call
will realize a 75.2% or
$1,072 profit (boxed in
green).
On the other hand, if XLI remains flat at option expiration, the 100-Strike Call will
only lose -4.5% or -$64. 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 XLI Mar 15 100-Strike Call at current prices.

GTLB
The next profit opportunity we will consider this week is in GTLB, or GitLab Inc. GTLB
is the provider of the DevOps platform, a single application that brings together
development, operations, IT, security, and business teams to deliver desired outcomes.

GTLB Monthly Chart

The monthly chart shows

that GTLB closed above
the moving average and
triggered a new buy signal
in June. The next targets
are 80 and 90.
 GTLB Daily Chart
The daily chart shows that
GTLB has been forming a
pattern of higher highs and
higher lows since November.
The bullish pattern points to
a further advance.
We are going to review a call
debit spread for GTLB.
Traders who want a more
leveraged approach can buy
GTLB Calls.

Buy to Open the GTLB Mar 15 55-Strike Call

Sell to Open the GTLB Mar 15 65-Strike Call
We can see from this
call option spread
analysis that the
spread will make a
40.8% or $290 profit if
the GTLB stock price
declines by -5%,
remains flat, or
increases in price
when the options
expire. If GTLB is
down -7.5% at
expiration, the trade
will make 37.3% or
$265.

LMB
The last profit opportunity we will review is in LMB, or Limbach Holdings, Inc. LMB
provides building systems. The Company engineers, constructs and services
mechanical, plumbing, air conditioning, heating, building automation, electrical and
control systems.
 LMB Monthly Chart

The monthly chart shows that

LMB has been above the
moving average line in a
confirmed bull trend since
August 2022. The buy signal
was activated when LMB was
trading at about 7.5. LMB has
rallied to over 45 since then.
That’s a 600% increase! And
the buy signal is still in place.

The daily chart shows that LMB LMB Daily Chart

was riding the Upper Keltner
Channel Line from early
November until the December
high. After a pullback, the
momentum has shifted back to
the bulls. The next targets are
46 and 50.
We are going to review a Call
Debit Spread trade for LMB.
Traders who want a more
leveraged approach can buy
LMB calls.
Buy to Open the LMB Apr 19 30-Strike Call
Sell to Open the LMB Apr 19 35-Strike Call

We can see from this Call

Option Spread Analysis that if
the LMB stock price declines
by -5%, remains flat, or
increases in price when the
options expire, the spread will
make a 26.6% or $105 profit.
The profits slide down from
there. If LMB is down -7.5% at
expiration, the trade will make
26.6% or $105.
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This week we recommended the following:

Buy VIRC Stock
Buy to Open the XLI Mar 15 100-Strike Call
Buy to Open the GTLB Mar 15 55-Strike Call
Sell to Open the GTLB Mar 15 65-Strike Call
Buy to Open the LMB Apr 19 30-Strike Call
Sell to Open the LMB Apr 19 35-Strike Call

Note: Profit performance displayed in this newsletter does not include

commission cost. Prices are based on Thursday End of Day.

We’ll see you next

week!