| From a fundamental perspective, most RV stocks now appear overvalued and vulnerable to a selloff. At a share price of $60, WGO is valued at 38 times trailing earnings. Even worse, CWH did not earn a profit over the past 12 months but expects to move into the black later this year. From a technical perspective, the news isn't much better. LCII just broke through its lower Bollinger Band last week and its RSI (relative strength index) dropped below 50. It has support near $105, about 12% below its recent share price. As for WGO, it is holding up a little better than LCII but has been on a steady downward drift over the past two months. It has tested its support level near $56 twice during that span and rebounded both times, but if it breaks down the next time, it may have a long way to drop. Reversion to the Mean It may be too late to participate in this year's resurgence by RV stocks. However, it's not too late to get in on their eventual reversion to the mean. To do that, consider buying put options on one or more of the above-mentioned stocks. A put option increases in value when the price of the underlying security decreases in value. For example, a few days ago while WGO was trading near $59, the put option expiring on January 15 at the $60 could be bought for $9. For this trade to become profitable, WGO must fall below $51. That's a 20% drop from where it is now, which may seem unlikely. However, the overall stock market could go through a major correction over the next four months pulling WGO down with it. Momentum has driven many stocks far beyond fair value, and if investor sentiment reverses course then we could witness just as big a move on the downside. Even if the stock market remains steady, demand for RVs could take a big hit if the economy does not soon get back on track. Not only are RVs expensive to acquire, but they are costly to operate. A recent report estimated the total cost of living full-time in an RV at roughly $2,500 per month. Admittedly, it may take longer than just a few months for the RV sector to rotate back towards the bottom. For that reason, you may be better off following the advice of my colleague, Jim Fink. Jim Fink is chief investment strategist of Options for Income, Velocity Trader and Jim Fink's Inner Circle. He also serves as a senior analyst at our flagship publication, Personal Finance. Jim routinely generates huge returns for his followers, by deploying simple yet powerful options strategies. The way Jim Fink trades options greatly reduces their risk. After years of painstaking trial-and-error, Jim has perfected an options trading system that's simple, safe and predictable. How predictable? Out of the 346 total trade recommendations he has made over the past 50 months, 293 were profitable. That's a "win rate" of 84.68%. Want to join Jim Fink's money-making followers? Click here for details. | 
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