Forex to Options

Discussion in 'Options' started by workbox, Jul 20, 2012.

  1. workbox

    workbox

    Hello everyone,

    I've been trading forex for years, and have been playing in the waters of equities and options recently. I'd like to share my mindset with the hopes of getting some constructive criticism.

    I begin with looking at a sector bell curve based on bullish percents to find sectors that have been depressed. Next, from that group, I look for sectors that are moving up and printing a column of Xs.

    By this point I'll have 2-5 sectors. Now I'll look for the biggest cap companies in each of these sectors and start looking at charts.

    My experience trading forex has given me excellent price action trading skills that I've been applying to the daily time frame of these equities. I look to daily supply/demand zones and price action for my entries.

    After choosing a sector, and then choosing a stock or two from these sectors with the most clearly defined demand zones I'll wait for daily PA to enter.

    After price rallies to a supply zone, I'll look to write covered calls just above the zone. The thinking here is that the premium will be juicier after a rally, and I'd be happy taking profit on my trade should I be called at the strike.

    Should price retreat from the supply zone, which it often does, I can just close out the call for a profit and wait for another rally to the zone to do the same thing.

    In summary, after choosing a sector that I like, I look at liquid stocks that present technical opportunities, wait for a rally to a zone where price will turn and take advantage of the premium with a covered call to either take profits by being assigned or to capitalize on the fluctuation of premium as price sells off from my supply zone.