Value Options: Selling Puts on AI’s Biggest Losers ($NOW, $WDAY, $META)
Sunday, August 30, 2026 · Johnny Hopkins
During their recent episode of the Value Options Letter and Acquirers Podcast, Travis and Carlisle discussed:
- Selling Puts on AI’s Biggest Losers
- How Selling Puts Can Create a Margin of Safety
- Why Your Put Strike Price Matters More Than the Premium
- When Should You Close a Profitable Options Trade?
- 195 Options Trades: What the Results Show So Far
TRANSCRIPT
[Tobias] Hi, this is Tobias Carlisle at the Value Options Letter podcast, joined as always by my co-host, Tim Travis. How are you, Tim? [Tim] I’m good, Toby. Widening down the summer here, it’s kind of crazy to think, but kind of looking forward to the season changing, especially out in Arizona. It’s been hot, hotter than blazes. [Tobias] Yeah, kids are back to school, folks are back to work, people are back looking at the markets again, and there have been some big moves. So, the thing that has dominated maybe the last two and a bit years has been the AI trade, which beat up a lot of good software stocks that you, from the headlines, you would have thought it was Ragnarok, but reading the financial statements and their businesses seem to be pretty strong. We put some of those trades on this year.Let’s talk about a few of them. Let’s talk about ServiceNow. That was one that was a little bit controversial when it went on, but how’s that worked out?
Selling Puts on AI’s Biggest Losers
[Tim] Yeah. So, the general theme was these stocks were high flyers trading at extremely high multiples to sales, to earnings, to cash flows, generally healthy balance sheets. But with the AI headlines, there really was the fear that almost all of these business models could be displaced.And there was a major bifurcation because the actual earnings and revenues are growing, but the stock prices have just plummeted. And so, ServiceNow, looking at the 52-week high, so its 52-week high was 194. It got down to 81.
So, we sold puts when it was trading below 100, and we targeted areas in the 70s and maybe the 80s too, maybe even in the 60s. And the premiums were excellent. And one of the nice things about utilising options is that you might set a trade that has a January expiration, so six months out, whatever it is.
And if that stock rallies rapidly in the short term, you’re going to be able to close out that trade and take the vast majority of the profit. So, we actually, on the value options letter, a message just went out to subscribers today, actually, that we closed out a ServiceNow put, I think we made like 92, 93% of the target profit, and it still had like 60 days to run or something like that. But that whole theme, Toby, I mean, a few of the other ones like Workday, Workday, a very good firm, very strong.
And they sold down to the just above $100. We sold some puts on that, and now there’s talk about them getting bought out, and the stock price is near $200. So, obviously, if you would have bought it at the lows, that’s fantastic too.
But by taking advantage of the volatility that was there and selling the puts, it’s a good strategy. Adobe HubSpot’s another. And then even things like Meta, they had the legal kind of uncertainty where 48 of the states were suing them over the addiction of its products.
And they settled, it looks like today, for $18 billion, which is a huge, crazy number. But last I looked, the stock was up a little bit. But that’s what volatility has allowed us to manufacture positions on these stocks at attractive returns.
How Selling Puts Can Create a Margin of Safety
[Tobias] So, there’s two things that we always look for when we’re looking at value options. So, this is distinct from folks who adjust trading options. We’re looking at the underlying business and making sure that it’s something we want to own at the adjusted price.So, that’s the strike less any premium that we receive because we’re selling a put, which means we get the premium and they’re cash secured, which means you have to put the capital up. But you want to make sure that in the event that the stock price continues to decline, in which case the stock is put to you. So, you’re effectively buying it at that lower price, which is the strike, less the premium you’ve received.
So, that reduces the price even further. And so, that’s always going to be a price that you would want to own the stock at. And then on the other hand, you have the internal rate of return or the CAGR on the premium that you’re receiving because it’s cash secured.
So, there’s cash in the account and you’re receiving some premium on that. You’re making sure that you’re receiving enough of a return to justify the position, the risk that you’re taking. And so, whichever outcome happens, you get put the stock, you’re getting the stock at a good price or you don’t get put the stock, the option expires, worthless, in which case you just collect the premium and there’s no payment.
Why Your Put Strike Price Matters More Than the Premium
[Tim] Exactly. And Toby, I’d rather be more conservative on the entry price into the stock. I know sometimes people will say, okay, I want to sell a put on like, let’s say a HubSpot or something like that.And you’re looking at the valuation of the company and what price you’d be comfortable owning it at. And maybe the premiums are way more attractive at 200 or 210 or 215 or something like that. But maybe in our valuation metric, we’re comfortable owning it or buying it at 170, let’s say hypothetically.
Even if you’re getting less premium, it’s worth it to get in at a price you truly want to own the stock at because stocks can go a lot lower. I mean, HubSpot’s 52-week highs like 525 and it’s lows, something like 150 or something like that. So yes, the discipline is an important part of this and kind of monitoring it.
When Should You Close a Profitable Options Trade?
And that’s one of the things about the value options letter. Options are pretty simple the way we use them. There’s really only two scenarios, heads, the option expires, tails, you end up getting exercised, either buying the stock if you sold a put or selling the stock you already own in a covered call, pretty simple.
But tracking them, keeping track of them and knowing when it makes sense to exit, maybe there’s a fundamental change. We haven’t seen a lot of that yet, but maybe the thesis is broken, that’s one reason to sell. Another is like, okay, we’re tying up $5,000 of capital and there’s only $10 left to make all the way to January.
Let’s free it up and recycle and set a new trade, Toby.
[Tobias] One of the things we’ve talked about sometimes when you sell the put into the position and the position rallies away from you, the equity does very well. And you might think, well, maybe in that instance, I would have been better off just buying the stock long. But it’s one of the interesting phenomena of this strategy that really does identify these stocks.Often stocks sell off more rapidly, they have this sort of increasing dip as they get close to the point where they’re about to bounce. And so that’s sort of the option volatility is a good way of identifying when you’re finding one of those, it’s getting close to the point where there’s some sort of reversal, which when you see the elevated option volatility and it makes sense to put that trade on, it’s also identifying something that’s getting closer to the end of its move. Do you think that’s fair?
[Tim] That could definitely be fair. And I’d say one thing I’m noticing right now is that premiums in the market are not huge. So really the focus has been on identifying undervalued stocks and where you already have that margin of safety and then getting a good enough premium.195 Options Trades: What the Results Show So Far
And I have some statistics. So as we’re recording this, Toby, it’s August 26th. And so thus far, we’ve published 195 trades on 79 distinct tickers.
So quite a few, quite a lot of variety. Right now there’s 98 trades open. We’ve closed out 90.
And so the median hold has been 47 days. And that’s a function of, I mean, a lot of things. There’s a huge variety there.
The longest hold we’ve had is 114 days. That’s probably more or less of a function of when we started this site, Toby. I mean, I think over time we’ll have trades that even go longer than that over.
But 47 days, and I wish I would have put the average premium earned on it, but the average annualised is 28%, 27.9% to be specific so far. So obviously past performance, non-negative future results, there’s risk in all investing and trading. This is publication for education.
It’s not investment advice. But for people considering subscribing, the idea that Toby and I had when we started this was for it to educate, but also to make money and ideally to more than pay for the subscription. And I’d recommend, look, if you have 75 to 100,000, I think that’s about enough to warrant it.
You could still try the trial if you have less and learn about it. But if you’re paying the subscription and you want to have proper diversification and stuff like that, I don’t really recommend subscribing with less than that. But I mean, if you have half a million, a million, $10 million, I mean, it’s a huge benefit to have these ideas and these things.
They’re going to provide insights to things that are likely going to add value and make you quite a bit of money in our estimation.
[Tobias] So one of the things we recommend that folks do, if you’re interested in trialling the service, you go to valueoptionsletter.com slash subscribe. And then you have a seven day free trial and there will be a series of trades that go through over that period of time. You have access to the site and you have a series of trades in real time and learn about the method, how we identify the stocks, how we identify the options and the sort of returns that we’re looking to achieve and how we’re looking to achieve those returns to become comfortable with the service before you commit to it.And you can also commit, you can use it for a month, you can subscribe for a year. There’s a bigger discount if you subscribe to a year, but month to month, just to get a flavour of how the site’s working, we recommend you take a look.
[Tim] Absolutely. Thanks. And we’ll do it again next week.I appreciate it, Toby.