"Passive" refers to the amount of time / involvement as well as the nature of the activity. Buying and selling notes could be portfolio, passive, or active. Portfolio income is basically investment income. You buy a stock, collect dividends, sell it after a few years for a gain. The dividends and gain are portfolio income. But, if you're a day trader and you spend 20 hours a week at it, that's an active trade or business. If I have a day trading business, and you invest in it by providing seed capital and nothing more, your income or loss would be passive.
Since you're the one doing the buying and selling, I doubt it's passive income. But it could be portfolio that would be capital gain and loss.
