My Top 4 Undervalued Stocks for Selling Puts in 2026
•February 13, 2026
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Why It Matters
The video translates recent sector drawdowns into actionable option strategies, showing how elevated implied volatility and disciplined sizing can turn market fear into income or discounted entry points while limiting downside exposure. For traders and asset allocators, the approach highlights practical ways to monetize short‑term volatility and buy exposure to beaten‑down yet fundamentally viable names.
Summary
Options educator Gavin from Options Trading IQ outlines a systematic approach to selling puts in 2026 and highlights four undervalued stocks as candidates, focusing in the transcript on Netflix and DraftKings. He applies a three‑question framework — temporary vs. permanent drawdown, technical support and implied volatility, and strict risk management (5% initial risk, max 10% after adjustments) — and prefers 25–35 delta strikes for ~65–75% win probability. For Netflix he cites a 39% pullback, positive free cash flow, higher implied volatility, and recommends cash‑secured puts or bull put spreads (example: selling the $70 put or a 70/65 spread) to buy at a discount or collect premium while limiting capital. For DraftKings he notes a ~50% collapse, very elevated implied volatility ahead of earnings, and a shorter‑dated $25 put as an example of high premium but elevated event risk; he favors spreads for capital efficiency and to manage earnings volatility.
Original Description
In this video, I'll share four specific stocks that present compelling opportunities for selling puts and put spreads in 2026 - all have experienced significant drawdowns and now offer elevated IV and attractive premium.
These aren't recommendations - this is educational analysis showing how I think about systematic put selling opportunities when quality businesses experience temporary headwinds.
📈 What You Will Learn:
What These 4 Stocks Have in Common:
✅ Significant drawdowns creating opportunity
✅ Elevated implied volatility = better premium
✅ Quality underlying businesses with temporary headwinds
✅ Reasonable support levels on charts
✅ Not going to zero - bounce potential
Stock #1: Netflix (NFLX)
✅ Pullback: $134 highs to $80 (39% decline)
✅ Concerns: Slowing subscriber growth, competition, content spending
✅ Strengths: Dominant platform, positive free cash flow, password crackdown monetized, ad tier gaining traction
✅ IV massively overpriced vs historical volatility
✅ Support expected: $70-80 range
Stock #2: DraftKings (DKNG)
✅ Pullback: $50 highs to mid-$20s (50% decline)
✅ Concerns: Regulation, competition from FanDuel, high customer acquisition costs
✅ Strengths: Early-stage US sports betting market, dominant player with FanDuel, gaining market share
✅ IV at 75% (highest in past year, well above 50% historical)
✅ Earnings this week = elevated volatility
Stock #3: SoFi (SOFI)
✅ Pullback: $33 highs to $21 (significant decline)
✅ Concerns: Rising rates impacting lending, credit quality questions, fintech competition
✅ Strengths: Achieved GAAP profitability, strong member growth, banking charter advantage, beaten earnings 4 consecutive quarters
✅ IV at 60% = large option premiums
✅ $21 price seems to discount a lot of bad news
Stock #4: Robinhood (HOOD)
✅ Pullback: $153 highs to mid-$80s (46% decline)
✅ Concerns: Crypto volatility impacting revenue, competition, sustainable revenue model questions
✅ Strengths: Already profitable, strong options trading revenue, crypto differentiator, best mobile trading experience
✅ IV typically 60-90% (currently 78%)
✅ Increasing earnings per share for multiple quarters
Key Framework (More Important Than Specific Stocks):
✅ Look for quality businesses with temporary headwinds
✅ Drawdowns create elevated IV and better premium
✅ Identify reasonable support levels
✅ Assess if willing to own at strike price
✅ Size positions appropriately
✅ Bull put spreads for capital efficiency
✅ Cash-secured puts if want to own stock
Critical Disclaimers:
- NOT recommendations to sell puts on these stocks
- Educational analysis based on systematic framework
- Do your own research and assess risk tolerance
- All stocks carry real risk, can go lower and stay lower
- Can lose money even if right about long-term direction
- Proper position management essential
Apply this framework to any stock/ETF with drawdowns - the approach matters more than specific names.
🔗 Helpful Resources:
Option Wheel Tracker Spreadsheet - https://optionstradingiq.com/wheel-tracker
Wheel eBook - https://optionstradingiq.com/wheel
10-Part Iron Condor Course - https://optionstradingiq.com/10-part-iron-condor-course
Options Trading 101 - https://optionstradingiq.com/101-book
OTIQ Best Articles - https://optionstradingiq.com/best-articles
Master Credit Spreads - https://optionstradingiq.com/mastering-credit-spreads
👍 Like this video if you found it helpful and comment below with your questions or experiences on mastering cash secured puts.
📣 Follow Us on Social Media:
Twitter: https://x.com/OptiontradinIQ
🎥 Related Videos:
This video is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
#optionselling #optionstrading #optionsellingstrategies
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