Costco’s Options Signal Bullish Bets at $950, But Deep Puts at $800 Warn of Downside – Here’s How to Play It

• Costco (COST) plunges 3.2% to $892.70, breaking below its 30-day moving average of $916.92.
• Options market shows heavy call open interest at $950 and puts at $800, with a put/call ratio of 0.83 (favoring calls).
• Recent news: record earnings, Texas expansion, and EV charging partnerships clash with supply chain risks and membership fee hikes.

Here’s the takeaway: COST is caught in a tug-of-war between short-term optimism and long-term caution. The stock’s 3.2% drop today has traders eyeing support levels, while options data hints at a potential rebound—or a sharp selloff. Let’s break it down.

Bullish Calls at $950 vs. Deep Puts at $800: A Tale of Two Bets

The options chain tells a story of divided sentiment. For Friday’s expiry, COST20251205C950 (OI: 1,603) and COST20251205C945 (OI: 1,689) are the most watched calls, suggesting some traders expect a rebound above $940. But don’t ignore the puts: COST20251205P800 (OI: 2,142) is a massive bet on a catastrophic drop, implying fears of a breakdown below $883.79 (lower Bollinger Band).

The block trade COST20250926P942.5 (selling puts at $942.50) adds intrigue. It’s like a whale saying, “I’ll take the risk that COST won’t fall below $942.50.” That could act as a short-term floor. But if the stock cracks $888.08 (today’s low), watch for panic.

News: Growth vs. Risks—Which Side Wins?

Costco’s Q4 earnings beat and $2B share buyback are bullish, but the membership renewal dip to 88% and supply chain warnings add friction. The Tesla EV charging partnership is a smart move, but the $1.2M labor fine and data breach lawsuits are headwinds.

Investors are pricing in a “best of both worlds”: they want to bet on the $950 calls if e-commerce growth accelerates, but the puts at $800 show they’re bracing for a worst-case scenario. The key question: Will Costco’s expansion offset rising costs and membership backlash?

Trade Ideas: Calls for the Bounce, Puts for the Drop

• If you’re bullish: Buy COST20251205C940 (OI: 2,473) if COST rebounds above $911.89 (30D support). Target: $950. Stop loss: below $900.
• If you’re bearish: Buy COST20251205P890 (OI: 959) if the stock breaks $888.08. Target: $875. Stop loss: above $900.
• Stock play: Consider entries near $883.79 (lower Bollinger Band) if it holds. Exit above $914.35 (200D support).

Volatility on the Horizon

The next 72 hours will be critical. If COST holds $883.79 and rallies toward $914.35, the calls at $940–$950 could ignite. But a breakdown below $883.79 would validate the puts at $800, triggering a wave of panic selling. Either way, the options market is pricing in a binary outcome—growth or collapse.

Your move? Lock in the COST20251205C940 for a controlled bullish bet, or the COST20251205P890 to hedge against a sharp drop. The stock’s 3.2% plunge today is a warning shot—don’t get caught off guard.