Costco (COST) Options Signal Key Support Battle: Bear Call Spreads and Put Plays at $850–$870

• Current price: $859.72 (down 0.34% from $862.65)
• OTM puts dominate near $850 (OI: 2,173), while calls peak at $880 (OI: 2,292)
• MACD (-13.42) and RSI (27.9) confirm bearish momentum
• Block trade: Whale sold 80 puts at $942.50 (exp 9/26/25) for $984k

Here’s the deal: Costco’s options market is locked in a tug-of-war between bears eyeing a breakdown below $855 and bulls clinging to $870. The technicals and options flow scream caution—this isn’t a stock in love with its current price. Let’s break it down.

The OTM Options Imbalance: A Bearish Playbook

Take a look at the OTM options: puts are stacking up near $850 (2,173 open contracts) while calls peak at $880 (2,292 OI). That’s not random—it’s a sign of positioning. Traders are hedging downside risk below $850 while some are betting on a rebound to $880. The block trade selling puts at $942.50? That’s a whale betting Costco won’t crater, but it’s a short-dated play (expiring in September 2025). For near-term traders, the real action is in the $850–$870 range. If the stock cracks $855 (lower Bollinger Band), those puts at $850 could get a rush of buyers. On the flip side, the call-heavy $880 strike might see a last-ditch rally if the 30D support at $921 holds.

Earnings Beats Can’t Outrun Valuation Woes

Costco’s Q1 numbers were solid—$66B in sales, 93% membership renewals—but the market isn’t celebrating. Why? The P/E of 56.8 and PEG of 5.59 are screaming “overvalued.” Analysts love the fundamentals but fear the stock can’t justify those multiples unless growth accelerates. That’s why you’re seeing the options market price in a correction. The recent earnings beat might buy time, but the puts at $850 suggest traders expect a pullback before 2026. Consumer sentiment matters too: if inflation pinches discretionary spending, membership renewals could slow—another reason bears are bullish on puts.

Trade Ideas: Bear Call Spreads and Precision Entries

For options: A bear call spread at COST20251219C870 and COST20251219C880 makes sense. If Costco dips below $870, the 880 calls could be crushed, locking in profits. For next Friday (12/26), the COST20251226P850 put is a key play—OI is rising there, and a break below $855 would validate the move.

For stock: Watch $855.14 (lower Bollinger Band). If it holds, consider a short entry near $850 with a stop above $863. A breakdown could target $840–$830. Conversely, if the 30D support at $921.59 holds, a rebound to $870–$880 is possible—but that’s a long shot.

Volatility on the Horizon: What to Watch

Costco isn’t going to collapse overnight, but the options market is pricing in a volatile finish. The key is whether the stock can hold above $855 without a rally above $870. If it can’t, the puts at $850 will dominate. For now, the data says: hedge your bets. The bears have the upper hand, but don’t count out a short-covering rally if membership trends surprise to the upside. Either way, this is a stock at a crossroads—and the options flow is telling a bearish story.