Question about developing

Hello everybody. My question is simple:)

I have a website that is hosted in hostgator in my reseller account. I want to develop the same website from scratch but i want the existing website to be online as i develop the new one. I spoke with hostgator live chat and we concluded that there are 3 options of doing that :

1. Develop the website in localhost (xampp, wamp, etc) and then tranfer it to server when its done.
2. Create a sample account in WHM (ex. example.com), develop the website, change names and links and then point the nameservers to the correct account.
3. Develop the website in subdomain in the existing account, and after is done, then change the urls to the correct without subdomains.

Wich one do you suggest?I am looking forward for your opinions. New methods are also welcome.
Thank you very much for your time.