# The Trade Idea Thesis

Quantitative Analysis: Macro, Sectors & 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


# BREAK EVEN , PROFIT , RISK