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The Bible of Options Strategies: The Definitive Guide for Practical Trading Strategies by Guy Cohen

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Chapter 5. Sideways Strategies

Introduction

Sideways strategies are defined as those where you make a profit provided that the stock remains rangebound. We're looking for a stock that is not going to explode with high volatility; rather, it's going to trade in a tight channel, preferably between clear levels of support and resistance.

So, bearing that in mind, would you look to trade a sideways strategy shortly before a news event like an earnings report? Heck, no! Get the news out of the way first, and then we have a greater chance of the stock meandering sideways, hopefully.

Sideways strategies can be challenging to trade, psychologically speaking. The reason is that as the stock touches support, we don't actually know if support will hold ...

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