Costco's Options Signal a Bullish Battle at $865: Here's How to Play the Rebound

• Current price: $864.33, down 0.4% from previous close
• Put/call open interest ratio: 0.79 (bearish bias, but calls dominate at 161k vs 127k puts)
• Key support/resistance: 861.45 (intraday low) to 879.04 (Bollinger middle band)

The options market is locked in a tug-of-war at Costco’s $865 level. With 1,401 puts open at $845 and 1,018 calls at $900, traders are hedging a potential rebound—or a breakdown. Let’s break down what the numbers really mean.

Where the Money Is Flowing: Puts at $845 vs Calls at $900

The options chain tells a story of cautious optimism. For this Friday’s expiration, the $900 call (COST20260102C900) has 1,018 open contracts—the highest of any strike. That’s a bullish signal, but it’s countered by the $845 put (COST20260102P845), which leads the put side with 1,401 open contracts. The 0.79 put/call ratio isn’t screamingly bearish, but it’s not neutral either.

Here’s the twist: A massive block trade sold 80 puts at $942.50 (COST20250926P942.5) last month. That’s a bearish bet on a sharp decline, but the stock hasn’t followed through yet. The market is pricing in a potential bounce—especially with RSI at 39 (oversold) and MACD (-12.03) hinting at a near-term reversal.

News That Could Tip the Scales

Costco’s membership growth (up 5.2% to 81.4M) and digital wins (24% e-commerce traffic surge) are bullish. But analysts are split: Citi cut its target to $990, while UBS stuck with $1,205. The stock’s 46.7x P/E premium over Walmart raises questions—will the market reward Costco’s digital edge, or punish its long-term averages (200D MA at $951)?

Trade Ideas: Calls at $900, Puts at $845, or a Bull Put Spread

1. Short-Term Call Play: Buy the $900 call (COST20260102C900) if Costco breaks above $865. The RSI and Bollinger Bands suggest a rebound to $879 is possible. Target: $920 (5.3% gain if stock hits $900). Stop: Below $861.45 (intraday low).

1. Bear Put Spread: Sell the $850 put (COST20260102P850) and buy the $845 put (COST20260102P845). If the stock dips below $861, the $845 put could catch a 5–7% move. Max profit: $5/share if price hits $845.

1. Stock Entry: Consider buying near $861.45 if the 30D MA (886.55) holds. A break above $879 (middle Bollinger band) could trigger a test of the 200D MA at $951. Stop: Below $855.

Volatility on the Horizon

Costco’s options activity and technicals are pointing to a pivotal week. The $865 level is a psychological battleground—break it down, and the stock could surge toward $900. But don’t ignore the puts at $845; a breakdown there would signal a deeper correction. With analysts bullish on digital growth but wary of valuations, this is a stock where patience and precise entry points matter. Keep an eye on next Friday’s options (COST20260109C915) for clues on whether the bulls are ready to take control.