I am of a like mind. I am a little under 50% in cash at this point. I don't know where the bottom is, actually i think it may well be quite a bit lower, but we see what looks like many bargains. My approach, in investment accounts, is to sell a few puts (never leveraged of course), not many, and continue selling them as long as we keep going lower, and there is enough panic to keep the prices at what seem to be absurd levels. I consider this to be buying through the backdoor, as i am perfectly happy should i be assigned.
I sell them relatively far out and a little out of the money. I will either get assigned at what i consider to be very fair net prices or i will make money on the puts, enough to compensate me for having to buy stocks at a higher price later, the same as would have happened if i waited to buy and we were in fact nearer the bottom than i realized. I would think it unlikely that the vix will stay above 50 for to many more weeks, and i want to sell those expensive puts until i run out of money. I still like the April FTO puts, and many others. One of the features i like about the refiner puts is that the probability calculations don't take into account the seasonal nature and that should give a little edge. If FTO is at 4 to six bucks in April (and i doubt that) i'm still Ok with having paid 7.50 for it.
I see traders referring to this as trying to catch a falling knife, but i consider that to be going short when something is falling at close to terminal velocity (i.e., chasing) . Instead, I'm trying to get long close enough to impact to have a reasonable chance of the bounce off the floor carrying me past my profit point. In any case, you won't here any whining from me.
I think this is going to be a doozy of a long, deep recession, so i won't be shy about grabbing profits on long positions if and when the opporunities arise. This behavior from me and others is going to make for a long, torturous climb off the bottom.
