Are you an investor or a trader?

BY ANDREW GIOVINAZZI

January 17, 2024

Yo Pit Crazies,

If you are not looking at Frank Gregory’s inside analysis and trades, you are missing out. Subscribe for free here. See below a stock that fits Frank’s long term energy thesis.

Is it a trade or an investment?

This comes up in my rooms all of the time. Confusing a trade with an investment. My students like certain names and they want trades in those names. “I think this stock is going up.” “It would make a great trade. “

I disagree with this. It might make a great investment not necessarily a great trade. Trades are price, time and volatility. With options, timing is everything. With stocks you just own them and hopefully at not bad prices.

Below is a secret stock. Note that every time this stock got to the low 30s it made a great trade. It has not made a great investment in the last 5 years however, it does pay a decent dividend.

Secret stock on a 2 year chart

Put the stock up against the Invesco QQQ Trust (Ticker: QQQ) and you will know what I mean.

This stock does exhibit some commodity characteristics.

Let’s unpack the differences between an investment and a trade. I will tell you what I did with this one.

Investments take delivery and trades are closed

The stock below is Apache Corp (Ticker: APA) which is a mini-Big Oil company. They just bought another producer so the stock is in a tailspin. Historically, that does not last forever. So does it make a great trade? Well I bought some APA March strangles as a riff in the Easy Trade Button because the implied volatility was at one year lows. I sold some of the puts Tuesday. A strangle is just a long call and a long put.

Stock goes down, sell the put and if the stock goes up, sell the call. This is a trade, not an investment but the APA potential bounce is a trade catalyst and could be an investment greenlight.

I just want trades to move. I want investments to grow.

Remember: If I sell the put, I want to own the stock as an investment at some level.

If I buy a strangle, I want to trade the direction, come what may.

If I buy a call, I need the stock to rally, no matter what.

Frank has been on the energy thesis for 2 years and I think it makes a great investment. The next area is Nuclear and is the only choice in the future. That will make great trades and investments for years to come.

To Your Trading Success,