Costco (COST) Options Signal Bullish Bias: Key Strikes and Trade Setups for 2026

• Costco’s Q4 earnings beat by $0.07/share, with revenue up 8.3% YoY to $67.31B.
• Options market favors upside: Call open interest (OI) outpaces puts 1.25x, with heavy concentration at $890–$900 strikes.
• Block trade alert: 80 contracts sold at the $942.5 put (expiring 2025-09-26) hint at bearish positioning.

Here’s the deal: Costco’s stock is caught in a tug-of-war between short-term optimism and long-term skepticism. The options market is leaning bullish, but technicals and news flow add layers of nuance. Let’s break it down.

What the Options Chain Reveals About Market Sentiment

The OTM call/put distribution tells a story. For this Friday’s expiry (2026-01-02), call OI peaks at $890 (1032 contracts) and $900 (978), while puts dominate at $845 (1512) and $840 (1274). This isn’t just noise—it’s a split decision. Retail traders and algorithms are betting on a rally above $890, but institutional players are hedging downside risks below $845. The Put/Call ratio of 0.799 (favoring calls) reinforces the bullish tilt, though the heavy put OI at $845–$850 acts as a safety net for bears.

Then there’s that block trade: COST20250926P942.5 sold 80 contracts at $942.5, a strike far below current price. Think of it like a storm cloud—someone big is bracing for a sharp drop, possibly tied to earnings or macro risks. It’s not a vote of confidence, but it’s not a death knell either. The key is to watch if the stock tests $845–$850 (support zone) or breaks above $890 (resistance).

News Flow: Bullish Fundamentals vs. Lingering Risks

Costco’s Q4 results are a win: $4.34 EPS and $67.31B revenue beat expectations, and analysts raised price targets—Argus to $1,200, Jefferies to “buy”. Membership growth and global expansion (especially outside the U.S.) are tailwinds. But don’t ignore the headwinds: Sam’s Club’s China push and a lobster supply-chain theft incident add friction. These aren’t existential threats, but they could pressure margins if they escalate.

The stock’s lag despite strong free cash flow also matters. Investors are frustrated—operational strength isn’t translating to price. That disconnect creates volatility. If Costco’s management addresses these concerns in upcoming calls or hints at a 2026 stock split (as 247WallSt speculates), we could see a re-rating.

Actionable Trade Setups for TodayOptions Play: For a bullish bet, target the COST20260102C890 (890-strike call expiring Friday). With OI at 805, it’s a liquid contract. Entry: $862.92 (current price). Target: Break above $890 to trigger a move toward $900–$915. Stop-loss: Below $862.12 (intraday low). For a bearish hedge, the COST20260102P850 (850-strike put) offers protection if the stock dips toward support at $845–$850.Stock Play: Buy Costco near $854–$856 (30D support zone) if it holds above $862.12. Target: $876.72 (middle Bollinger Band) first, then $890. If it breaks below $854, exit. For aggressive traders, a breakout above $868.0 (intraday high) could signal a push toward $880–$890.Volatility on the Horizon

Costco’s story in 2026 hinges on execution. Stronger-than-expected membership growth or a stock split could fuel a rally. But China’s competitive pressures or supply-chain hiccups might cap gains. The options market is pricing in a 5–7% move by January 2nd, so keep an eye on the $890–$900 calls and $845–$850 puts as liquidity hotspots. If the stock holds above $862, the bullish case strengthens. Below $854? Time to reassess.

Bottom line: Costco’s fundamentals are solid, but the stock’s direction depends on balancing optimism with caution. Use the options chain as your guide—calls at $890 and puts at $850 are your best bets for now. Stay nimble, and don’t let one headline dictate your strategy. The market’s watching, and so should you.