Costco Surges 5.06% on Strong December Sales and Analyst Upgrades—What’s Fueling the Rally?

Summary
• Costco’s December net sales jumped 8.5% to $29.86B, with total-company comparable sales up 7.0%
• Analysts at Telsey and UBS reiterated 'Outperform' and 'Buy' ratings, targeting $1,100–$1,205
• Options chain shows explosive demand for call options with leverage ratios exceeding 70%

Costco Wholesale (COST) has surged 5.06% intraday to $927.27, driven by robust December sales, analyst upgrades, and a bullish options flow. The stock’s 52-week high of $1,078.23 remains within reach as institutional and retail investors alike bet on its membership-driven growth story.

December Sales and Analyst Upgrades Ignite Bullish Momentum
Costco’s December net sales of $29.86 billion, up 8.5% year-over-year, underscored its dominance in the wholesale club sector. Total-company comparable sales rose 7.0%, with digital sales surging 19%, signaling strong e-commerce traction. Analysts at Telsey Advisory Group and UBS upgraded the stock to 'Outperform' and 'Buy,' respectively, with price targets of $1,100 and $1,205. These upgrades, coupled with Jefferies’ $1,050 target, reflect confidence in Costco’s ability to sustain membership growth and absorb rising costs. The stock’s intraday surge also coincided with a 463.95% price change ratio for the $910 call option (COST20260116C910), indicating aggressive short-term positioning.

Wholesale Clubs Sector Gains Momentum as BJ’s Expands
The wholesale clubs sector is witnessing renewed interest as BJ’s Wholesale Club announced nine new store openings in 2026, including locations in Texas, Florida, and Alabama. While Costco’s 8.5% December sales growth outpaced BJ’s 4.3% revenue increase, the sector’s competitive dynamics highlight Costco’s pricing power and membership model. Walmart (WMT), the sector leader, saw a 0.208% intraday gain, reflecting broader retail optimism. Costco’s ability to maintain 90% membership renewal rates and expand its Executive tier further differentiates it from peers.

Leveraged ETFs and High-Gamma Calls for Short-Term Bulls
• 200-day average: $950.34 (above current price)
• RSI: 61.29 (neutral to overbought)
• MACD: -5.67 (bullish crossover near)
• Bollinger Bands: $844.23–$893.40 (price above upper band)

Costco’s technicals suggest a continuation of its bullish momentum. The stock is trading above its 200-day MA and within overbought RSI territory, indicating strong near-term demand. For leveraged exposure, the Leverage Shares 2X Long COST Daily ETF (COTG) and Roundhill COST WeeklyPay ETF (COSW) offer amplified returns. COTG surged 10.17% intraday, while COSW rose 7.14%, aligning with the stock’s volatility.

Top Options Picks:
• COST20260116C930
- Strike: $930 | Expiration: 2026-01-16 | IV: 22.94% | Leverage: 74.78% | Delta: 0.484 | Theta: -2.468 | Gamma: 0.0119 | Turnover: 1.54M
- IV (Implied Volatility): High, reflecting strong expectations
- Leverage: Amplifies gains if the stock breaks $930
- Delta: Moderate sensitivity to price moves
- Theta: Aggressive time decay, ideal for short-term bets
- Gamma: High sensitivity to price acceleration
- Turnover: High liquidity ensures easy entry/exit
- Payoff at 5% upside: $973.63 → $43.63 profit per contract
- Why it stands out: Combines high leverage with strong liquidity and gamma, ideal for a breakout above $930.

• COST20260116C935
- Strike: $935 | Expiration: 2026-01-16 | IV: 23.19% | Leverage: 89.68% | Delta: 0.426 | Theta: -2.259 | Gamma: 0.0116 | Turnover: 256,768
- IV: High, indicating strong volatility expectations
- Leverage: Extreme amplification for aggressive bulls
- Delta: Lower sensitivity, better for directional bets
- Theta: Moderate time decay, suitable for 1–2-day holds
- Gamma: Strong sensitivity to price acceleration
- Turnover: Sufficient liquidity for retail traders
- Payoff at 5% upside: $973.63 → $38.63 profit per contract
- Why it stands out: High leverage and IV make it ideal for a sharp rally, though delta suggests it’s better for directional rather than volatility-driven plays.

Trading Setup: Aggressive bulls should target a break above $930 (200-day MA) to validate the bullish case. A close above $935 would trigger the $935 call’s gamma-driven acceleration. For conservative plays, the COTG ETF offers 2x exposure with lower gamma risk.

Backtest Costco Wholesale Stock Performance
The backtest of Costco's (COST) performance after a 5% intraday increase from 2022 to the present shows favorable results. The 3-day win rate is 51.76%, the 10-day win rate is 59.77%, and the 30-day win rate is 57.62%, indicating that the stock tends to experience positive returns in the short term following the 5% surge. The maximum return during the backtest period was 3.52%, which occurred on day 59, suggesting that there is potential for gains but also the possibility of moderate volatility.

Costco’s Rally Gains Steam—Act Now Before Volatility Peaks
Costco’s 5.06% surge is fueled by strong December sales, analyst upgrades, and a bullish options flow. The stock’s technicals and sector dynamics suggest a continuation of the rally, with key resistance at $930–$935. Investors should monitor the 200-day MA ($950.34) and RSI (61.29) for overbought signals. The sector leader, Walmart (WMT), gained 0.208%, reinforcing retail optimism. For immediate action, consider the COST20260116C930 call for a high-gamma breakout play or the COTG ETF for leveraged exposure. Watch for a close above $935 to confirm the next leg higher.