Costco (COST) Options Signal Bullish Bias at $870–$880: Here’s How to Position for a Potential Rebound

• Current price: $861.95, up 0.18% with volume at 960K shares
• RSI at 35.25 (oversold), Bollinger Bands squeezing near lower bound ($859.41)
• Put/Call OI ratio at 0.76 (calls dominate), with heavy call OI at $880 and $950 strikes

The market is whispering a rebound. Costco’s options activity and technicals suggest a short-term bounce could be brewing, but long-term bearish trends linger. Let’s break down why traders are eyeing $870–$880 as a key battleground.Bullish OI Clusters and Bearish Whales: What’s the Play?

Costco’s options chain tells a story of cautious optimism. This Friday’s open interest shows calls at $880 (OI: 2,268) and $950 (OI: 2,226) dominate, while puts at $850 (OI: 2,265) and $800 (OI: 1,778) hint at downside concerns. The put/call ratio of 0.76 (calls > puts) suggests more buyers betting on a rebound. But don’t ignore the bearish block trade: a massive COST20250926P942.5 put sale (80 contracts, $98.4K turnover) signals some big players hedging or shorting ahead of September expiration. The next Friday’s options show calls at $870 (OI: 1,685) as a fresh hotspot—could this be a whale setup for a midweek rally?

News vs. Options: Do Analysts Back the Bull Case?

Costco’s Q1 earnings beat ($4.34/share) and $16.2B cash reserves are positives, but membership renewal dips (92.2%) and insider sales ($9M in Q3) add friction. Analysts are split: TD Cowen’s $1,175 target and UBS’s $1,205 optimism clash with Roth Capital’s $769 sell rating. The potential $20/share special dividend is a wildcard—options traders might be pricing in a $870–$900 rebound if the payout materializes. However, Jim Cramer’s caution and Goldman’s lowered target ($1,171) mean volatility isn’t going away. The key question: Will Costco’s AI investments and e-commerce growth offset membership worries?

Trade Ideas: Calls, Puts, and Price Levels to Watch

For options traders, the most compelling plays are:

• Bullish: Buy COST20251219C880 (this Friday) or COST20251226C870 (next Friday) if price breaks above $868.58. Target $890–$900, with a stop below $859.41 (lower Bollinger Band).
• Bearish: Buy COST20251219P850 (this Friday) if price dips below $858.23. Target $840–$830, but watch for TD Cowen’s bullish narrative to reverse the trend.

For stock traders, consider:

• Entry near $860 if support at $859.41 holds. Target $875 (30D support level) and $893 (middle Bollinger Band).
• Stop-loss at $850 to protect against the put-heavy OI at that level.

Volatility on the Horizon: Balancing Bullish Setup and Bearish Risks

Costco’s chart is a tightrope walk. The RSI’s oversold reading and Bollinger Band squeeze suggest a rebound is likely, but the long-term bearish moving averages (30D: $903, 200D: $955.64) mean this could be a short-lived rally. The $870–$880 range is critical—break above it, and the bulls gain momentum; fail, and the puts at $850 could drag the stock lower. With a potential special dividend and mixed analyst ratings, the next two weeks will test whether Costco’s fundamentals can outpace its technical headwinds. Stay nimble, and let the options flow guide your entries.