You’ve probably noticed a few recent blog posts and twitter comments from the All Star Charts team singing the praises of “cash”. There’s nothing wrong with cash as a position if there aren’t any compelling ideas to get you excited about. In fact, its often the best move.
However, we options players can still structure trades that will profit in sideways markets. But a big challenge currently is that we prefer higher options prices driven by relatively high volatility to sell into — and its hard to find that anywhere right now. Across the board, options prices are getting extremely compressed everywhere. What to do?
How about a strategy that positions us to benefit from sideways action while also getting a goose from any reversion to the mean (er, higher) volatility? [Read more…]