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| author | nic <ra@afu.re> | 2024-07-12 13:58:52 -0400 |
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| committer | nic <ra@afu.re> | 2024-07-12 13:58:52 -0400 |
| commit | d9457a3aa4ca86be1b7db164537210f152d8eb1b (patch) | |
| tree | 679684f19c0bcb62c753c789d12777d5dbea3f86 /Finance/The Trade Idea Thesis.md | |
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diff --git a/Finance/The Trade Idea Thesis.md b/Finance/The Trade Idea Thesis.md new file mode 100644 index 0000000..5a46188 --- /dev/null +++ b/Finance/The Trade Idea Thesis.md @@ -0,0 +1,64 @@ +# The Trade Idea Thesis + +Quantitative Analysis: Sector & Stock Data + +Qualitative Analysis: The Story. Understanding the company business & commenting on it. + +KPI’s: Understanding the metrics that drive Revenue & Earnings + +Catalyst: Potential event that will drive alpha + +Time Horizon: Shortest time frame that will capture the catalyst(s) + +Price Target: Quant and Volatility analysis + +Trade Structure: Stock, options , spread trade ? Risk management ? + + +## Quantitative Analysis + +Numbers, Numbers and Numbers ! + +EPS0, EPS1, EPS2, PE1, PE2, EG1, EG2, PEG1, PEG2 + +To work out these numbers you would only need stock price, reported EPS and forward looking EPS. + +## Qualitative Analysis + +Why inferior/superior earnings and/or revenue growth ? +What are the drivers of growth ? +What advantages/disadvantages in relation to the sector ? +Will it continue ? +What are the future catalysts ? +Do you agree with the market ? +Will you have conviction medium/long term if in the short term it goes against you ? +Are you willing to buy/short more to back your idea ? +What are the risks ? +What changes the story, what changes your mind if you are wrong ? +Who is the management and is it any good ? +Who are the shareholders ? +What will affect earnings ? +What is the sector doing ? +What is the product ? +How do they fit in the supply chain ? +Who are the suppliers ? +Who are the customers ? +Who is the competition ? +What is the company share of the market ? Gaining / Losing ? + + +## KPI’s + +Most sectors have different KPI’s, find them usually in presentations, earning calls or industry reports. + + +# Catalysts + +Earnings, Buyback, splits, dividends, outlook +Acquisition, Restructuring and Deals +Legal & Regulatory issues +Analyst upgrade / downgrade +Credit upgrade / downgrade +Short squeeze +Conference & Events +Products launches |