Costco (COST) Options Signal Bullish Bias as Earnings Loom: Key Strikes and Strategies for Dec 12–19 Expirations

• Costco’s Q1 earnings report (Dec 11) could spark volatility, with options data showing heavy call open interest at the $950 strike.
• A falling wedge pattern and analyst speculation about a stock split hint at potential upside, but bearish technicals and inflation risks remain.
• Block trades and put/call ratios suggest a mixed playbook: bullish bets on a breakout, but hedging at $850–$880.

Here’s what the data says: Costco shows upside potential if earnings beat, but downside risks linger near $870.The Options Playbook: Calls at $950, Puts at $850, and a Whale’s Warning

Costco’s options chain tells a story of cautious optimism. For this Friday’s expiration (Dec 12), the COST20251212C950 call has the highest open interest (1,725 contracts), while the COST20251212P850 put leads puts with 1,560 contracts. Next Friday’s (Dec 19) data amplifies this: the COST20251219C950 call jumps to 2,354 OI, and the COST20251219P850 put holds 1,945 OI. This suggests traders are pricing in a potential $950 ceiling if earnings exceed estimates—or a floor at $850 if inflationary pressures reignite.

But there’s a twist. A recent block trade sold COST20250926P942.5 puts for $98,400, hinting at bearish positioning ahead of earnings. Combine this with the put/call ratio of 0.835 (calls dominate), and it feels like a tug-of-war: bulls are betting on a post-earnings rebound, while bears are hedging at key support levels.

Earnings, Splits, and the Road to $1,000

Costco’s Q1 results (Dec 11) are the wildcard. Analysts expect $4.25 EPS and $67.28B revenue, with a Zacks Rank “Hold” and a forward P/E of 43.71. The news flow is mixed: membership growth and digital sales are strong, but SG&A costs and inflation could drag. Yet, the falling wedge pattern on the stock chart and analyst chatter about a potential split (like in 2000) add a bullish narrative. If management announces a split or special dividend, the stock could test $1,000. But if earnings miss or inflation fears resurface, the 200D moving average at $940.75 might crumble.

Actionable Trades: Calls, Puts, and Precision Entries

For options traders, the COST20251219C950 call is a high-conviction play. If Costco breaks above $950 post-earnings, this strike could see explosive gains. For downside protection, a put spread at COST20251219P850 and COST20251219P880 offers a defined risk zone. The block trade at $942.50 also suggests a short put at that strike could attract liquidity if the stock stabilizes.

Stock buyers should eye $879.96 (lower Bollinger Band) as a key support level. If Costco holds here, a rebound toward $905.93 (middle band) is plausible. A breakout above $913.43 (30D support/resistance) would signal a shift in momentum. Conversely, a drop below $870 (top put OI) would validate bearish bets.

Volatility on the Horizon

Costco’s next move hinges on earnings and management’s messaging. The options market is pricing in a $950 ceiling and $850 floor, but the stock’s technicals and fundamentals are in a tightrope walk. If the falling wedge breaks higher, the path to $1,000 is open—but a breakdown below $870 could force a reevaluation of the long-term bullish case. For now, the data says: trade with a plan, hedge at $850, and watch Dec 11 like a hawk.