From time to time I come across a chart that demonstrates a pattern where price is being “pinned in” by 2 moving averages (one above, one below). The potential of a nice move, in one direction or the other, makes for a nice opportunity to buy a Strangle (options) – what I call my “Look Both Ways” trade.
Now before you call 9-1-1 to report a murder, let me provide some info on just what a Strangle is via Investopedia:
The example of this price “compression” I came across today is ACXM (Acxiom Corp) – here is a Daily chart:
Although the current option activity is small for this security, I really wanted to highlight the current price action as price is wedged in by the 50 day moving average below (Support) and the 200 day moving average above (Resistance). Something here for the Bulls – & the Bears – to play a nice move it seems.