Costco's Options Signal a Bearish Battle at $900–$980: How Traders Can Hedge or Capitalize on the Upcoming Volatility

• Costco’s price action is stuck in a tight range near $913.64, with Bollinger Bands squeezing it between $905.84 and $952.86.
• Options market sentiment leans bearish: puts dominate at $900–$880, while calls pile up at $980–$950, hinting at a tug-of-war between cautious bears and hopeful bulls.
• Block trading just sold 80 puts at the $942.5 strike, suggesting big players are hedging a potential dip.

Here’s the thing: Costco’s technicals and options data are painting a clear picture. The stock is under pressure, but the market isn’t pricing in a freefall. If you’re trading this name, you need to know where the battle lines are drawn—and how to position for the next move.

The Options Warzone: Where Bears and Bulls Are Digging In

Let’s start with the options chain. The put/call ratio for open interest is 0.95, meaning calls and puts are almost evenly matched. But the strikes tell a different story. For Friday’s expirations, puts are clustered heavily at $900 (OI: 2,151) and $902.5 (OI: 1,478), while calls peak at $980 (OI: 1,407) and $950 (OI: 1,379). This isn’t just noise—it’s a signal. Retail and institutional players are hedging against a drop to $900, but there’s also a small army of bulls betting on a rebound to $980.

The block trade at COST20250926P942.5 (selling 80 puts) adds intrigue. Why would someone sell puts at $942.5, a strike 7% below the current price? It could mean they’re confident Costco won’t fall that far—or they’re setting up a short-term hedge ahead of earnings or macro events. Either way, it’s a data point worth watching.

News vs. Options: Can Costco’s Sales Surge Outpace Bearish Sentiment?

Costco just reported a 8.6% sales jump in October, with digital sales surging 16.6%. That’s solid, right? But here’s the catch: the controversial Executive member-only hours policy is a double-edged sword. While it’s boosting short-term revenue, it’s also alienating a chunk of their customer base. The options market isn’t celebrating the sales numbers—it’s pricing in caution. Why? Because investors know that membership loyalty is fragile, and a PR misstep could hurt recurring revenue.

The disconnect here is key. The news supports a bullish narrative, but the options data suggests traders are bracing for a pullback. Think of it like a storm brewing: the ground looks dry, but the radar shows thunderclouds. If Costco’s management can’t address customer concerns while maintaining sales momentum, the bearish options bets might win this round.

Actionable Trade Ideas: Where to Play the Volatility

Let’s get practical. If you’re bullish but cautious, consider a bull call spread using the $930 and $950 strikes for next Friday. Buy the $930 call (OI: 941) and sell the $950 call (OI: 1,020). This caps your risk but gives you exposure to a potential rebound. Why those strikes? The $930 call is just below the 30-day support at $911.82, and the $950 call aligns with the top OTM call cluster. If Costco breaks above $918.1 (today’s high), this spread could pay off.

For bears, the $900 put (OI: 1,320 for next Friday) is a clean play. The strike is right under the 200-day support at $976.29, and the open interest suggests liquidity. But here’s the catch: if Costco holds above $911.67 (today’s low), the puts might expire worthless. So, only go long if you see a breakdown below that level.

Stock traders, consider a short-term long position if Costco holds above $911.67. Set a stop-loss just below $910.94 (30-day support). If it holds, aim for a target at $929.35 (middle Bollinger Band). But if it breaks below $905.84 (lower Bollinger Band), it could test the $880–$885 put cluster—a level where massive open interest might provide a floor.

Volatility on the Horizon: Preparing for the Next Move

Costco isn’t in a freefall, but it’s definitely in a holding pattern. The RSI at 35 and MACD below zero confirm oversold conditions, which could spark a rebound. However, the 200-day MA at $972 is a tall wall to climb. The key will be whether the company can balance its aggressive membership strategies with customer retention. If the bearish options bets at $900–$880 start to unwind, that could signal a shift in sentiment.

For now, the data says: defensive plays are in favor. But don’t write off the bulls entirely. The $950–$980 call cluster isn’t just noise—it’s a bet that Costco’s sales momentum will outpace the bearish technicals. If you’re willing to take that risk, the options market is giving you a map to do it.