Costco Wholesale Corporation (COST) Weekly Calls Hot After Earnings

Costco Wholesale Corporation (COST) is lower today, but that hasn't stopped option bulls

by Josh Selway

Published on May 28, 2015 at 2:31 PM
Updated on Jun 24, 2020 at 10:16 AM

Costco Wholesale Corporation (NASDAQ:COST) is down 0.8% at $144.25 today, as traders respond to the company's mixed fiscal third-quarter results. In the stock's option pits, calls are crossing at nearly four times the expected intraday pace. One of the more popular call options is the weekly 5/29 145 strike, which looks to be seeing buy-to-open activity. This means traders are looking for COST to topple $145 by tomorrow's close, when the series expires.

Recently, the stock's option pits have been marked by put buying. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), COST has accumulated a put/call volume ratio of 0.82, which ranks higher than 70% of readings from the past year.

Many analysts have also taken skeptical stance. Of the 21 brokerage firms with coverage on the shares, nine rate them a tepid "hold." Plus, the average 12-month price target of $155.09 represents a slim 7.1% premium to current trading levels.

All of this skepticism is strange, given the stock's technical history. Over the past 12 months, Costco Wholesale Corporation (NASDAQ:COST) has added over 26%, and hit an all-time high of $156.85 early February. If COST can regain the momentum it's used to seeing on the charts, some of this pessimism could translate into tailwinds.


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