Suppose I think that a particular security is long-term undervalued and short-term overvalued. That is, it's trying to catch up with its fair value (which is above the current price), but it's doing it too fast. What would be a good strategy/instrument to take advantage of this discrepancy? More specifically, suppose that this security is likely to go up 20% in the next 12 months, and equally likely to go down by 10% in the next 3 months. I smell some combination of in-the-money and out-of-the-money puts and calls, but it's been a while since I read the arbitrage books. I thought of selling the front month futures and going long the longer term futures, but this doesn't seem right. Can someone reference a web site or some other resource that discusses these types of positions/trades? Thanks.