Costco's Options Signal a Bullish Battle at $960: Here's How to Play the Volatility

• Costco's Q4 earnings beat estimates, but its stock trades near a 52-week low amid long-term bearish technicals.
• Options market shows heavy call open interest at $960 and $945, while puts dominate at $870—hinting at a key price war.
• A $984,000 block trade selling puts at $942.50 suggests big players are hedging or shorting near critical support.

Here’s the core insight: Costco’s stock is caught in a tug-of-war between short-term bulls (pushing for a rebound) and long-term bears (betting on a breakdown). The options market and technicals point to a decisive move either above $945 or below $937.31 in the coming days. Let’s break down why this matters for your portfolio.

The Options Crossroads: Calls vs. Puts at Key Strikes

Costco’s options chain is a chessboard of conflicting bets. For Friday expiration, the top call open interest piles up at $960 (1,074 contracts), $945 (958), and $1,000 (842). These strikes form a tight cluster just above the current price, suggesting traders are pricing in a potential breakout. Meanwhile, puts dominate at $870 (979 OI), $890 (738), and $900 (730)—a 9% downside cushion from today’s price.

This isn’t just noise. The put/call ratio of 0.918 (nearly balanced) hides a deeper story: bulls are stacking up near-term calls to test resistance, while bears are hedging further out. The block trade selling 80 puts at $942.50 (COST20250926P942.5) adds intrigue. Why? That strike aligns with the 30-day support zone (942.84–943.98). If the stock breaks below this, those puts could trigger a cascade of forced selling.

Company News: E-Commerce Growth vs. Reputational Risks

Costco’s Q4 results were a mixed bag. E-commerce sales hit $19.6B (15% YoY growth), and membership fees surged 14%—both bullish tailwinds. But the decision to stop dispensing mifepristone in U.S. pharmacies is a reputational landmine. Conservative groups praise it, but progressive customers might defect. This duality mirrors the options market: strong fundamentals vs. near-term sentiment risks.

The membership fee hike and tiered benefits also matter. Executive members now drive 74% of sales, but Gold Star members feel sidelined. If this alienates younger demographics (who make up 40% of new signups), it could pressure the stock further. For now, the market seems to price in the positives but is hedging against the negatives—hence the heavy put activity.

Actionable Trade Ideas: Calls, Puts, and Price Levels

For options traders:

• Bullish Play: Buy the COST240927C960 (Friday expiration) if Costco breaks above $945. The $960 strike is a psychological hurdle; a close above it could trigger a rally toward $970–$980.
• Bearish Play: Buy the COST240927P870 if the stock dips below $937.31 (intraday low). This puts option is a hedge against a breakdown toward $900–$910.

For stock traders:

• Entry Near $943.98 (upper 30-day support): If Costco holds above $942.84, consider buying dips to target $955–$960.
• Stop-Loss Below $937.31: A break here invalidates the bullish case and opens the door to $920–$900.

Volatility on the Horizon: What to Watch

Costco’s next move hinges on two factors:

1. E-Commerce Momentum: If Q1 e-commerce growth accelerates (current guidance is 13.5%), bulls could reclaim control.
2. Membership Retention: Watch for any signs of churn in Q1 reports. A drop in Executive member growth would signal trouble.

The options market is already pricing in a 9–10% swing either way. That’s your playbook—play the breakout or breakdown with precision. But stay nimble: Costco’s story isn’t just about numbers—it’s about brand loyalty in a polarized world. And that’s where the real volatility lies.