GitLab (GTLB) Might Be a UFO!
I found some weird leaf on the ground and when I touched it, I was able to glide through the air! I think it might be a UFO!
What does any of that have to do with GitLab? Well I thought its logo was a fox and apparently it's actually a tanuki (Japanese raccoon dog). That got me thinking about Tanooki Mario. But before I get to GTLB...
What's the Word on the Street?
All indexes are currently up as private payrolls showed slowing growth and unemployment claims came in higher than expected. Investors took that as data as weak enough to ensure rate cuts, but strong enough to not have the economy plunge into recession.
All that comes before the anticipated monthly jobs report releasing tomorrow. We'll get a chance to see a more comprehensive picture of how the labor market is doing. It may also affect how aggressive the Federal Reserve will be as they begin to cut interest rates.
GitLab (GTLB)
What Is It?
Gitlab, Inc. provides code hosting and collaboration platform services. It offers continuous integration, source code management, out-of-the-box pipelines, agile development, and value stream management. The company was founded by Dmitriy Zaporozhets and Sid Sijbrandij in 2011 and is headquartered in Dover, DE. The listed name for GTLB is GitLab Inc. Class A Common Stock.
Why Is It a Possible UFO?
Primarily its current share price relative to its fair value, what other option traders expect, and its volatility are the reasons GTLB could be a UFO.
What About Recent News?
GTLB reported its earnings and despite beating expectations, it issued weaker-than-expected revenue guidance.
The company, which provides software-development tools, also said its chief financial officer is stepping down later this month.
GitLab said Wednesday it now expects adjusted earnings per share of 82 cents to 83 cents for the year, up from its prior guidance of 74 cents to 75 cents. It continues to forecast full-year revenue of $936 million to $942 million.
Analysts polled by FactSet were looking for adjusted per-share earnings of 75 cents on revenue of $940.8 million.
The updated outlook comes after the company swung to a loss of $9.21 million, or 6 cents a share, in the second quarter, compared with a profit of $12.9 million, or 8 cents a share, a year earlier.
Adjusted earnings per share were 24 cents, ahead of estimates for 16 cents a share according to analysts polled by FactSet.
Revenue rose 29% to $236 million, topping the $226.9 million expected by analysts.
What's the Current Price?
GTLB hasn't had a good year so far, but it's notably down ~8% on the day after reporting earnings, so I want to take advantage of a possible investor overreaction to weaker-than-expected guidance.
It's always a bit of a gamble on when is the best time to jump in, because an expected rebound can easily turn into a catching a falling knife situation. But I'm not so worried about entering the trade early because of...
What’s the Fair Value?
I’d first like to emphasize that fair value is subjective. Many analysts at many banks and institutions rate stocks differently and assign fair value in their own unique way. So, what I like to do is take all the recent fair values since the most recent earnings report and average them. In this case…
Since GTLB most recent earnings report on 09/03/2025, it has received 9 ratings and taking the average, the fair value might be somewhere around: $59.22.
All ratings are a Buy. The lowest price target is $53, while the highest is $70.
What Do Options Traders Expect?
Calls are trading over equidistant Puts, which means traders think there is a chance to the upside. You can see because… forget about the green columns and focus on the red. Notice how on the right side for the $37.5 Put it says $0.95, it’s $1.00 for the equidistant Call at $50.
The premium (the credit you receive for executing the trade) is currently less for selling Puts, as opposed to selling Calls. Basically because of that, option traders expect the stock to go up, rather than down.
How About Volatility?
The IV rank (the purple line) for GTLB (stock price in blue) is currently hovering around 50.65, which is fairly high (IV rank goes from 0-100). This makes short strategies (which are what I prefer) more attractive.
What's the Trade?
My preferred trade is a variation of the wheel without the rolling, AKA cash-secured puts. I typically like to target stocks that offer a dividend and are below fair value.
Why a dividend? If the trade results in assignment and I’m on the hook for X amount of shares, I can at least be satisfied knowing I picked a (hopefully under fair value) company that will pay me a small amount while I run the other side of the trade AKA covered calls.
GTLB does not offer a dividend, but that’s not a dealbreaker!
It’s a fairly low-risk strategy (all options trading is risky!), that has a higher probability of success, but requires a higher amount of collateral.
So if you saw the most recent image above, I already STO (sold to open) 2 contracts of the $37.5 Put for the October 17th expiration. I like to have a DTE (Days To Expiration) that is around ~45 days.
When the trade reaches 50% profit I will buy it back. I don’t like to be greedy and go for more profit, because I would rather not waste my time being in a trade for too long.
What About Alternative Trade Ideas?
- If the collateral requirement is too high, another idea is a put credit spread. You would sell a put at a strike below the current share price and then buy a put at a lower strike than the put you sold. By doing so, you will avoid the collateral requirement of a cash-secured put, but the credit received will be smaller. Also, if the trade goes sideways, you will not be assigned shares so no collecting dividends and running covered calls afterwards.
- Just invest! 1 share or even fractional shares are a way to get a foothold in a stock that you think might increase in value.
Wait…Where Are the Candlesticks? And All the Other Indicators?
I know many traders love their candlesticks and a ton of indicators. I prefer simplicity. Candlesticks aren’t necessary unless you’re the kind of trader that wants to try and pick the perfect moment to execute a trade, and even then it’s not a sure thing.
As for indicators, there are a ton. Some of them work sometimes. None are perfect. I don’t want to get bogged down with too many. You’ll drive yourself crazy looking at too many of them, so find a handful you like and stick with those.
Disclosures
- I currently have an open trade with GTLB (as mentioned in this post).
- No trade is a sure thing. There is always risk involved.
- This blog post is not meant to take the place of financial advice, but hopefully acts as a guide for learning or informational purposes.