One way to try to use fundamental analysis in stock buying to built up a portfolio of long positions in undervalued stocks and short positions in overvalued stocks. It is very hard to get this to work because, even though reversion to the mean eventually happens, it is very hard to predict when. You probably will be stopped out of your positions before they become profitable. Thus it seems that a way to possibly implement such a strategy successfully, one might buy longer term (4 month to leaps) calls for the undervalued and longer term puts for the overvalued. I have no idea on the best way to pick strikes if you have such a goal. Is there any analysis of such a portfolio approach available? TIA.