Options Traders Swarm Costco Stock After Revenue Miss

Overall options volume is running at 10 times the intraday average

Digital Content Manager
Mar 3, 2023 at 10:37 AM
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The shares of Costco Wholesale Corporation (NASDAQ:COST) are down 3.7% at $467.82 this morning, after the retailer reported a fiscal second-quarter revenue miss, while earnings beat estimates. The company noted surging inflation is causing weaker demand for big-ticket discretionary items.

The brokerage bunch is having mixed reactions to the results, with three firms slashing their price targets, including Telsey Advisory Group to $540 from $580, while two firms hiked their price objectives. Analysts are optimistic toward COST, with 15 of 24 in coverage calling it a "strong buy."

Overall options volume is today running at 10 times the intraday average, with 26,000 calls and 19,000 puts across the tape so far. The most popular contract is the 3/3 460-strike put, followed by the 480-strike call in that weekly series, with positions currently being opened at both. 

Options bulls have ruled the rooster in the last two weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day call/put volume ratio of 1.23 stands higher than 80% of annual readings. 

Now may be a great time to weigh in on COST with options, per its Schaeffer's Volatility Scorecard (SVS) of 88 out of 100. This means Costco stock has exceeded option traders' volatility expectations during the past year. 

Shares are today extending their pullback from their early February rally, which lost steam at the $530 region. The security has also recently slipped under the 20-day moving average, which is now sloping lower. Year-over-year, COST is down 12%.

 

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