Earn Yield from Two Oversold Stocks

Markets have a habit of punishing good companies for short periods—sometimes for legitimate reasons, sometimes simply because sentiment turns negative. For investors, those dislocations can create opportunity, particularly when a stock becomes oversold and starts to stabilize.

But there’s a second layer to that opportunity that many investors overlook: you may be able to stay linked to a potential rebound while collecting income along the way—by using options-based income ETFs.

These funds are not traditional dividend ETFs. They typically generate cash flow by selling call options (a covered-call style approach) tied to a specific underlying stock or exposure. The tradeoff is straightforward:

You may receive regular distributions funded primarily by option premium, not operating-company dividends.

You often cap some upside if the underlying stock rallies sharply (because calls sold can limit participation above certain levels).

You take on unique risks, including high fees, potential distribution variability, and the possibility that distributions include return of capital (ROC), which can reduce NAV over time.

With that framing, here are two setups that combine “oversold opportunity” with an income-first structure.

ETF: YieldMax RDDT Option Income Strategy ETF (SYM: RDYY)

If you want yield exposure to a high-growth platform stock without owning the stock directly, YieldMax RDDT Option Income Strategy ETF (SYM: RDYY) is designed to do exactly that.

As of January 23, RDYY was trading around $34.

How RDYY works (in plain English)

RDYY seeks current income while maintaining exposure to Reddit’s share price, primarily by employing an option-income strategy tied to Reddit (RDDT). YieldMax discloses a gross expense ratio of 0.99%, a 30-day SEC yield of 2.23%, and a distribution rate of 58.15% (based on the fund’s most recently declared distribution annualized).

Importantly, YieldMax also discloses distribution composition. For the most recent distribution declared on 01/21/2026, the fund reported 86.91% return of capital and 13.09% income.
That does not automatically mean something is “wrong,” but it does mean investors should understand that the cash paid out may not be sourced from traditional “net investment income.” ROC can have tax implications and can contribute to NAV erosion if it persists.

Why the underlying (Reddit) matters here

Reddit has become a focal point for two major narratives:

A) Fundamental momentum and operating leverage.
In its Q3 2025 results, Reddit reported revenue of $585 million (+68% YoY), DAUq of 116.0 million (+19% YoY), diluted EPS of $0.80, and free cash flow of $183 million.
Those are not “mature utility” metrics—they’re platform-growth numbers, and they help explain why investor attention returns quickly when the stock stabilizes after a drawdown.

B) The AI distribution and citation dynamic.
A growing argument on Wall Street is that as search interfaces shift toward AI-generated answers, the value accrues to the sources that those answers cite and reference. Some analysts have highlighted Reddit as a disproportionate beneficiary of that citation behavior in AI-driven search experiences.

As of January 23, Reddit (RDDT) was trading around $219.78.

Recent weekly payouts (what investors actually see)

YieldMax’s website shows recent RDYY distributions paid weekly, including:

$0.4737 payable 01/09/2026

$0.6558 payable 01/16/2026

$0.3929 payable 01/23/2026

Weekly distributions can be attractive for cash-flow planning, but they can also fluctuate materially from week to week.

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ETF: YieldMax DKNG Option Income Strategy ETF (SYM: DRAY)

If you prefer a consumer/event-driven catalyst profile—where demand surges around key sports calendars—DraftKings is often in the conversation. For investors who want that exposure with an income overlay, YieldMax DKNG Option Income Strategy ETF (SYM: DRAY) offers a similar structure to RDYY.

As of January 23, DRAY was trading around $26.67.

How DRAY works

YieldMax reports DRAY’s gross expense ratio at 0.99%, its 30-day SEC yield at 2.20%, and a distribution rate of 47.19% (again, based on annualizing the most recent distribution).

On distribution composition, YieldMax indicates that the most recent distribution declared on 01/21/2026 contained 52.16% return of capital and 47.84% income.
Same takeaway: attractive cash flow potential, but investors should understand what’s driving it.

Why DraftKings matters here: event catalysts and analyst support

Sports betting has become one of the most “calendar-sensitive” themes in markets, with heightened engagement around marquee events.

To quantify the scale: AGA survey estimates for total Super Bowl wagering (including casual wagering and broader activity, depending on the year’s methodology) rose sharply in recent cycles—$7.61B (Super Bowl LVI), $16B (LVII), and $23.1B (LVIII).
Separately, the AGA has also published legal-only Super Bowl wagering estimates in more recent reporting (a different methodology), underscoring how large the regulated market has become even before considering informal/casual activity.

For March Madness, the AGA estimated $3.1B would be wagered nationally in 2025.

On the Street, DraftKings has also seen supportive research. Needham reiterated a Buy rating with a $52 price target (as reported by Investing.com).
Wells Fargo also upgraded DraftKings to Overweight with a $49 price target (as summarized by The Fly / Yahoo Finance).

As of January 23, DraftKings (DKNG) was trading around $30.29.

Recent weekly payouts

YieldMax’s website lists recent DRAY distributions paid weekly, including:

$0.2900 payable 01/09/2026

$0.1772 payable 01/16/2026

$0.2576 payable 01/23/2026

Collect Yield While These Stocks Rebound - 1/26