Costco (COST) Options Signal Bullish Bias: Key Strikes and Legal Risks to Watch

• Costco’s stock dips 0.28% to $919.43, trading below its 30-day moving average but above key support at $911.88.
• Options data shows heavy call open interest at $940 and $950 (expiring Friday), while deep puts at $800 and $880 hint at hedging activity.
• A blockbuster block trade sold 80 puts at $942.50, suggesting institutional confidence in near-term stability.

Here’s the takeaway: COST is perched on a tightrope—technical indicators and options flow lean bullish, but a looming Supreme Court ruling on Trump-era tariffs could shake things up. Let’s break it down.

Bullish Calls vs. Deep Puts: What the Options Flow Reveals

The options market is split. Call open interest peaks at $940 (OI: 1,697) and $950 (OI: 1,491) for Friday expiration, signaling bets on a rally. Meanwhile, puts at $800 (OI: 2,147) and $880 (OI: 1,660) show hedgers bracing for a worst-case drop. The put/call ratio of 0.84 (favoring calls) reinforces the bias.

But don’t ignore the block trade: A recent sale of 80 puts at COST20250926P942.5 (expiring Sept 26) suggests big players are locking in downside protection. Think of it like a captain securing the lifeboats—prepared for storms but not expecting them.

Legal Drama and Market Sentiment: A Match Made in Uncertainty

Costco’s lawsuit against Trump’s tariffs isn’t just legal theater—it’s a wildcard. If the Supreme Court rules the tariffs illegal (as many experts predict), the company could get massive refunds on duties paid. That’s a tailwind for margins and stock price.

But here’s the catch: The ruling is still pending, and the market is pricing in both outcomes. The heavy put activity at $800 and $880 reflects fear of a “no refund” scenario, where tariffs stay and costs persist. For now, the news flow and options data are in a holding pattern—waiting for the court’s verdict to tip the scales.

Trade Ideas: Calls for the Bold, Puts for the Pragmatic

For options traders, the most compelling plays are:

• Bullish: Buy COST20251205C940 (Friday expiry) if COST breaks above its intraday high of $926.27. The RSI at 54 and MACD crossing above its signal line add fuel to the fire.
• Bearish: Buy COST20251212P880 (next Friday expiry) if the stock dips below $911.88 support. The lower Bollinger Band at $882.00 could amplify the move.

For stock traders, consider:

• Entry near $919.43 if the 30-day support at $911.88 holds. Target $940 (call strike) if the MACD histogram continues to rise.
• Stop-loss below $911.88 to avoid a breakdown into the $882.00 lower band.

Volatility on the Horizon: Balancing Risk and Reward

The coming weeks are a tightrope walk. The options market is pricing in a 60%+ chance of a rally to $940–$950, but the Trump tariff case could disrupt that script. If the court rules in Costco’s favor, watch for a gap up and a test of the $963.52 200-day MA. Conversely, a “no refund” decision could send the stock tumbling toward $880–$875 puts.

Bottom line: Position for the bullish case but keep a seatbelt of puts. The data says go, but the legal drama means one wrong step could send COST off the rails. Stay nimble, and keep an eye on that Supreme Court calendar.