Costco's Options Signal Bullish Bias: Key Strikes and Block Trades Point to Strategic Entry Zones

• Costco (COST) trades at $940.52, down 0.44% from its 52-week high of $945.47 amid mixed technicals.
• Options data shows heavy call open interest at $960 and $945, while puts dominate at $870—hinting at a bullish bias with downside caution.
• A $98,400 block trade in the $942.50 put suggests institutional confidence in near-term support.

Here’s the core insight: COST’s options activity and technicals point to a short-term bullish setup, but long-term bearish trends and legal risks demand caution. The stock is dancing on a tightrope between retail-driven optimism and macroeconomic headwinds.

Bullish Pressure at $960, Bearish Caution at $870

Let’s start with the options data. The top OTM calls for Friday expiration are clustered at $960 (OI: 1,074) and $945 (OI: 958), while puts peak at $870 (OI: 979). This isn’t random—it’s a signal. Traders are betting on a rally above $945.47 (today’s high) but hedging against a drop below $929.10 (middle Bollinger Band). The put/call ratio of 0.918 (calls slightly ahead) reinforces this duality: optimism is winning, but fear isn’t far behind.

The block trade in the COST20250926P942.5 put—selling 80 contracts at $942.50—is telling. Institutional players are likely hedging against a pullback, assuming the stock won’t fall below this level. That’s a green light for traders to watch the $942.84 support zone (30D support) as a key entry trigger.

News Flow: Retail Resilience vs. Legal Risks

Costco’s recent headlines are a mixed bag. The new Executive member perks and membership fee hikes have boosted sales by 1% weekly, driving 74.2% of U.S. revenue. That’s a win for bulls—management’s confidence is contagious. But the abortion pill policy shift? That’s a reputational landmine. While it aligns with conservative customer values, legal challenges could create volatility, especially if states sue over access restrictions.

The key takeaway? The stock’s fundamentals are strong, but sentiment is fragile. If Costco’s retail momentum continues, the $960 call strikes could ignite. But if legal risks escalate, the $870 put level becomes a critical watchpoint.

Actionable Trade Ideas: Calls for Friday, Puts for Next Week

For options traders, the $960 call (Friday expiration) is a high-conviction play. With 1,074 open contracts, it’s the most liquid OTM strike. If COST breaks above $945.47 (today’s high), this call could see explosive volume. For a safer bet, consider a call spread between $945 and $960 to cap risk while capitalizing on the short-term bullish trend.

On the stock side, here’s a concrete setup:

• Entry: Buy COST near $942.84 if it holds above the 30D support.
• Target: Aim for $955.80 (upper Bollinger Band) if the $945.47 intraday high is cleared.
• Stop: Exit below $929.10 (middle Bollinger Band) to protect gains.

For downside protection, the $870 put (Friday expiration) offers a hedge if the stock gaps lower. But given the block trade at $942.50, I’d prioritize the call side unless volatility spikes.

Volatility on the Horizon: Balancing Bullish Momentum with Strategic Caution

Costco’s story is a tug-of-war between retail resilience and regulatory uncertainty. The technicals and options data lean bullish in the short term, but the 200D moving average ($972.61) and long-term bearish MACD (-1.35) suggest caution. This isn’t a buy-and-hold trade—it’s a calculated bet on near-term momentum.

If you’re in, keep a tight stop and watch the $945.47 intraday high as a breakout trigger. If you’re on the sidelines, the $960 call offers a leveraged way to play the retail rally without full stock exposure. Either way, don’t ignore the legal risks—they could turn this tightrope into a freefall if things go sideways.

In the end, Costco’s options activity tells a story of optimism with a side of anxiety. The question is: Are you ready to ride the bullish wave—or brace for the bearish crash?