Remember Software?Software remains stuck in a broad trading range, but the tactical setup is becoming increasingly interesting. Relative performance is improving, fundamentals remain resilient and short positioning is still elevated, creating the ingredients for another squeeze higher.IGVLate last week we highlighted the bounce potential in IGV, writing that, given the violent roundtrip since early May, a relief rally attracting additional buyers would not be surprising.Software has continued to squeeze higher. While the sector remains directionless, trading short-term exhaustion in both directions has continued to be a profitable mean-reversion strategy.Let's see how far this one squeezes.Source: LSEG WorkspaceIGV over SOXSoftware leaving SOX way behind over the past few days.Source: LSEG WorkspaceZooming outThe IGV/SOX ratio has started to recover, but the longer-term trend still clearly favors semiconductors. While we're not looking to fight that broader trend, the ratio appears oversold enough to support a tactical squeeze higher without changing the longer-term leadership story.Source: LSEG WorkspaceSoftware buybacksSoftware companies have accelerated share buybacks.Source: HSBCAI fears overdone?HSBC argues the market has overestimated AI disruption. Revenue growth, margins and pricing remain resilient, while buybacks continue to accelerate. In their view, software valuations have become disconnected from fundamentals.Source: HSBCSoftware shortsThe late-May squeeze triggered a wave of panic short covering, but shorts remain elevated on a broader basis. If software starts working again, these investors could quickly find themselves chasing the move higher.Source: JPMIGV optionalityWe like playing mean reverting setups like IGV via options instead of chasing the underlying. The Aug 95/104 call spread offers around 4x.Not a bad payoff if software delivers another late-May-style squeeze.Source: LSEG Workspace