Costco's Options Imbalance and Block Trades Signal Key Support Battle at $900—Here's How to Position for the Upcoming Volatility

• Costco's October sales rose 8.6% YoY, but technicals and options data hint at a bearish bias
• Put/call open interest ratio near 0.93 suggests aggressive downside positioning ahead of expiry
• Block trades and $900 put OI imply a critical support level to watch for short-term traders

The stock is caught in a tug-of-war. On one side, Costco’s sales growth and membership-driven revenue are firing on all cylinders. On the other, technical indicators and options market sentiment paint a bearish picture. Here’s how to navigate the crosscurrents: the stock shows downside risk in the short term, but the fundamentals could spark a rebound if support holds.The Options Imbalance: A Bearish Playbook with Hidden Bullish Triggers

Let’s start with the options chain. The put/call open interest ratio of 0.93 (put OI: 144,019 vs. call OI: 154,153) isn’t screamingly bearish, but it’s not bullish either. What stands out? The $900 put strike dominates the short-term put OI with 2,003 contracts—nearly double the next closest strike. That’s not just noise; it’s a price level where a lot of money is betting on a drop.

But here’s the twist: the $980 call strike (OI: 1,398) and $1,000 call strike (OI: 1,925 for next Friday) suggest some bullish positioning. Traders aren’t giving up on the stock entirely. They’re hedging their bets—betting on a rebound if Costco breaks above key resistance or a sharp drop if it fails.

The block trade at COST20250926P942.5 (selling puts with a $942.5 strike) adds another layer. A single trade of 80 contracts at $1,230 per contract implies a whale is either hedging a large stock position or accumulating puts at a strategic level. This could signal a belief that Costco won’t fall below $942.5 in the near term—but if it does, the $900 puts might get a rush of buyers.

The News Narrative: Can Fundamentals Outmuscle Technical Headwinds?

Costco’s October sales report is a goldmine. The 8.6% YoY growth, 16.6% digital sales surge, and Executive membership policy are all tailwinds. The new shopping hours for Executive members have already added 1% to weekly U.S. sales, and CEO Ron Vachris is projecting $3 billion in incremental revenue from this policy alone.

But here’s the catch: the market isn’t pricing in this optimism. The stock is trading below its 30D, 100D, and 200D moving averages, and the RSI of 40.06 suggests oversold territory—but not extremely oversold. The disconnect between fundamentals and technicals means the stock could surprise either way. If the $900 support holds and the news flow continues to impress, we could see a rebound. If not, the bearish momentum might accelerate.

Actionable Trade Ideas: Where to Place Your Bets

For options traders, the most compelling plays are:

• Buy-to-open the $900 put strike (expiring Friday, OI: 2,003). This is where the bulk of downside positioning is concentrated. If Costco breaks below $910.94 (30D support), these puts could gain value quickly.
• Sell-to-open the $950 call strike (expiring next Friday, OI: 1,042). This is a sweet spot for a short-term bear call spread if you believe the stock will stay below $950.
• Consider a bullish calendar spread using the $930 call (next Friday OI: 915) and the $950 call (Friday OI: 1,347). This plays on the possibility of a short-term rebound without a full reversal.

For stock traders, the key levels are:

• Entry near $910.94 if the 30D support holds. Set a stop-loss below $907.47 (lower Bollinger Band) to protect against a breakdown.
• Target zone: $930–$940 if the stock rebounds. This range aligns with the middle Bollinger Band and the block trade’s $942.5 level.
• Avoid buying above $918.89 (intraday high) unless there’s a breakout confirmation. The 200D MA at $972.24 is a long-term ceiling, but short-term momentum is weak.

Volatility on the Horizon: What to Watch for Next Week

The next 7–10 days will be critical. If Costco holds above $900, the $940–$950 range could become a battleground for a rebound. But if the stock breaks below $900, the puts at $880 (OI: 3,251 for next Friday) might ignite a wave of panic selling.

The block trade at $942.5 is a subtle clue: large players are betting the stock won’t collapse further. That could mean a floor is forming—but only if the fundamentals hold up. For now, the options market is pricing in a 50/50 chance of a rebound. Your job? Decide where you stand and position accordingly.