Costco (COST) Options Signal Bullish Bias: Key Strike Levels and Earnings-Driven Opportunities

• Earnings report due tomorrow (Dec 11) with a 63% historical chance of a post-earnings pop
• Options market shows heavy call open interest at $950 and $902.5, vs. top puts at $850
• Technicals point to bearish near-term trend, but options suggest a potential upside breakout

The stock is caught in a tug-of-war: technical indicators scream caution, but options activity and earnings momentum hint at a bullish twist. Here’s how to navigate the crossroads.What the Options Chain Reveals About Market Sentiment

The options market is leaning hard into the upside. For Friday’s expiration (Dec 12), the top call strike at $950 has 1,896 open interest—nearly double the next highest at $902.5. This suggests a quiet consensus that Costco could test $950 if earnings deliver a surprise. Meanwhile, puts are clustered at $850 ($1,758 OI) and $870 ($813 OI), indicating a floor many expect before a rebound.

But here’s the twist: the put/call ratio for open interest is just 0.846, meaning bullish bets dominate. That’s not a fluke. Traders are pricing in a scenario where Costco’s Q1 results justify a breakout above its 30-day moving average ($910.85).

A notable block trade—COST20250926P942.5—sold 80 puts at $942.5 with $98,400 in turnover. While it hints at bearish positioning, the sheer volume of call open interest suggests this trade is an outlier. The real story is the $950 call wall: if earnings exceed expectations, this strike could become a magnet for momentum buyers.

Earnings and News: Fuel for a Post-Report Rally

Costco’s earnings report tomorrow is the wildcard. Analysts are split: Oppenheimer and UBS have lofty $1,050–$1,205 price targets, while Citi trimmed its target to $990. But here’s the kicker—historical data shows a 63% chance of a positive one-day return after earnings. That aligns with the call-heavy options setup.

The news flow isn’t all bullish. Insider selling (like EVP Claudine Adamo’s $3.19M exit) raises questions. But analysts counter that Costco’s 93% membership renewal rate and $11.12B gross profit are structural strengths. The Canadian grocery crown and digital expansion also signal resilience.

Actionable Trade Ideas for TodayFor Options Traders:

• Buy COST20251219C950 (next Friday’s $950 call). High open interest and a $1,050 analyst price target make this a leveraged play if earnings beat.
• Sell Puts at $870 (COST20251219P870). With the lower Bollinger Band at $877.90, this strike offers a buffer if the stock dips but holds.

For Stock Traders:

• Entry near $913.43 (30-day support). If the stock holds above this level, target a rally to $950.
• Short near $875 if it breaks the lower Bollinger Band. Stop loss at $888.44 (previous close).

Volatility on the Horizon

The next 48 hours will define Costco’s near-term trajectory. A strong earnings report could ignite a rally toward $950, validating the call-heavy options bets. But if the stock stumbles below $877.90, the puts at $850 may gain steam. Either way, the options market has already priced in a directional move—now it’s up to the fundamentals to deliver.

For traders, the key is to align with the crowd’s expectations while respecting the technical guardrails. Position yourself at the $913.43 support or $950 call strike, and let the earnings report decide the next act.