Two Big Trade Ideas From Phil Davis

Why It Matters

These trades show how targeted options spreads can hedge equity risk and capture commodity upside, offering high‑reward, limited‑loss opportunities for disciplined investors.

Key Takeaways

• Use SQQQ inverse ETF as hedge against Nasdaq decline
• Structured call spread costs $32,500 for $180,000 exposure
• Short June 80 calls generate premium to offset hedge cost
• Suncor trade leverages oil price upside with put‑call spread
• Assigned shares risk manageable via margin and roll strategies

Summary

In the latest interview, options strategist Phil Davis outlines two distinct trade ideas – a Nasdaq‑focused hedge using the SQQQ inverse ETF and a long‑oil play on Canadian energy producer Suncor (SU).

The SQQQ hedge is built as a call spread: 60 contracts of the 2028 $70 call bought for $32, the sale of 50 contracts of the 2028 $100 call at $27.50, and the short sale of 20 June $80 calls for $11 each. The net outlay of $32,500 secures a $180,000 notional exposure, meaning a 10% Nasdaq drop (which lifts SQQQ 30%) would push the spread in‑the‑money and recoup the capital. Premium collected from the short June calls also offsets the hedge cost, effectively providing “free insurance.”

For Suncor, Davis proposes a synthetic long position: sell ten 2028 $60 puts for $860, buy twenty 2028 $60 calls, and sell fifteen 2028 $75 calls. Additional income is generated by selling seven June $65 calls and five June $60 puts, netting a $3,055 credit on a $30,000 spread with an 881% upside potential. The primary risk is assignment of roughly 1,500 shares at $60, a level Davis is comfortable holding, and margin requirements further limit cash exposure.

Both setups illustrate how sophisticated options structures can turn market volatility into defined‑risk opportunities. The SQQQ spread protects recent portfolio gains from a Nasdaq correction, while the Suncor spread captures upside from rising oil prices without outright stock ownership. Investors who can monitor stops, manage assignment risk, and maintain sufficient margin may achieve outsized returns, but the strategies demand active oversight and a solid understanding of options decay and assignment mechanics.

Original Description

Phil Davis, Founder of philstockworld.com, breaks down two trade ideas to consider, highlighting the opportunities and risks, while using various options strategies.

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