Costco's Options Signal a Battle at $920–$940: How to Position for Labor Disruption and Volatility

• Costco’s price fell 0.79% to $922.52, pressured by bearish technicals and a put/call ratio of 0.93 (slightly bearish).
• Options activity shows heavy put open interest at $920 and $905, with block trades hinting at hedging ahead of a potential strike.
• Unionized workers authorized a strike by Jan 31, demanding better pay despite Costco’s $254B revenue and $7.4B profits.
• Key levels to watch: Bollinger Bands (905–955), 30D support/resistance (943–944), and 200D trendline at $942.77.

Here’s the deal: Costco’s stock is caught in a tug-of-war between bearish technicals, aggressive put buying, and a looming labor strike. The options market is pricing in a high probability of a breakdown below $920, but there’s also a fight brewing at the $940–$945 resistance cluster. Let’s break down what this means for traders and how to position for the next move.

The Options Playbook: Puts Dominate as Big Money Hedges

Options data tells a story of caution. This Friday’s expiring puts have 1081 open interest at $920 and 1004 at $905, while calls peak at 1053 at $970. The block trade of 80 contracts at COST20250926P942.5 (strike price $942.50) is a red flag—someone with deep pockets is hedging a potential dip.

This isn’t just random buying. The put/call ratio (0.93) suggests a slight bearish tilt, and the heavy put OI at $920 and $905 implies institutional players are bracing for a worst-case scenario. But here’s the twist: the 30D support/resistance cluster at $943–$944 and the 200D moving average at $972.77 are both above the current price. If the stock holds above $920, the puts might expire worthless.

Labor News: A Strike Could Be the Wild Card

Costco’s wage hike to $30.20/hour by 2027 is a win for workers, but the Teamsters union isn’t satisfied. With 85% of members authorizing a strike, the risk of labor disruption is real. Here’s how that could play out:

• Short-term: A strike would spike labor costs and hurt operational efficiency.
• Long-term: If the union gets a better deal, it could boost employee retention and morale.

The market is already pricing in some of this risk. The $920 put (strike price $920) is the most liquid contract, and the block trade at $942.50 suggests big players are hedging a mid-September breakdown. But if the stock rallies above $944 (30D resistance), the puts lose value, and bulls could reclaim control.

Actionable Trade Ideas: Play the VolatilityFor Options Traders:

• Bear Put Spread (This Friday): Buy the $920 put (OI: 1081) and sell the $905 put (OI: 1004). Maximum profit if the stock closes below $905.
• Bull Call Spread (Next Friday): Buy the $935 call (OI: 168) and sell the $970 call (OI: 905). This works if the stock rebounds above $944.

For Stock Traders:

• Short Entry: If the stock breaks below $920, consider a short position with a stop-loss at $930. Target $905 (lower Bollinger Band).
• Long Entry: If the stock holds above $920, buy at $925–$930 with a target at $944 (30D resistance).

Volatility on the Horizon: What to Watch

Costco’s stock is sitting on a knife edge. The $920–$940 range is critical—break below $920, and the 200D moving average at $972.77 becomes a distant memory. But if the stock holds above $920 and rallies past $944, the puts could expire worthless, and bulls might regain momentum.

The key takeaway? This isn’t a one-way bet. The options market is pricing in a potential strike-driven selloff, but the technicals still show a fight at $940. Traders who position for both scenarios—using options spreads to cap risk—will be best prepared for whatever happens next.

Final Thought: The coming weeks will test Costco’s ability to balance labor costs with profitability. For now, the options data and news flow suggest a high-volatility environment. Stay nimble, watch the $920 level like a hawk, and don’t let the 200D moving average lull you into complacency. The strike deadline is January 31, but the market’s already pricing in the risk. Time to act.