😰 COST: Massive $52M Put Wall Built Before Earnings
Breaking: $52.1M in massive defensive positioning detected on COST. - 🔥 Unusual Score: 10/10 - Activity level that happens NEVER!... Premium members get full institutional flow analysis, price targets, and actionable trading strategies.
📅 September 18, 2025 | 🔥 Unusual Activity Detected
🎯 The Quick Take
Someone just dumped $52 MILLION on COST put options expiring tomorrow - that's 6,654x larger than average daily premium! With Q4 earnings coming September 25 and the stock trading at nosebleed valuations (54x P/E), institutions are building a massive defensive wall against potential downside. Translation: Big money is getting nervous about Costco at these levels.
🏢 Company Overview
Costco Wholesale Corporation is the world's second-largest retailer operating a membership warehouse model:
- Market Cap: $427.1 billion
- Industry: Retail-Variety Stores
- Core Business: Membership-based, no-frills retail model offering bulk quantities at bargain prices
- Employees: 350,000+ worldwide
- YTD Performance: +4.7% (currently $952.36)
💰 The Option Flow Breakdown
📊 What Just Happened
| Time | Symbol | Buy/Sell | C/P | Expiration | Premium | Strike | Volume | OI | Size | Spot | Option Price |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 15:33:22 | COST | BUY | PUT | 2025-09-19 | $24M | $1,000 | 5.7K | 680 | 4,950 | $951.69 | $49.30 |
| 15:33:22 | COST | BUY | PUT | 2025-09-19 | $9.8M | $990 | 2.5K | 254 | 2,480 | $951.69 | $39.45 |
| 15:33:22 | COST | BUY | PUT | 2025-09-19 | $7.3M | $1,020 | 1.1K | 71 | 1,050 | $951.69 | $69.25 |
| 15:33:22 | COST | BUY | PUT | 2025-09-19 | $5.4M | $985 | 1.6K | 175 | 1,600 | $951.69 | $33.85 |
| 15:33:22 | COST | BUY | PUT | 2025-09-19 | $3.7M | $1,000 | 758 | 680 | 750 | $951.69 | $49.29 |
| 15:33:22 | COST | BUY | PUT | 2025-09-19 | $1.9M | $995 | 423 | 46 | 420 | $951.69 | $44.70 |
Total Premium: $52.1M in PUT purchases
Option Symbols:
- COST20250919P1000 - View Option Chart
- COST20250919P990 - View Option Chart
- COST20250919P1020 - View Option Chart
- COST20250919P985 - View Option Chart
- COST20250919P995 - View Option Chart
🤓 What This Actually Means
Real talk: This is absolutely massive put buying ahead of tomorrow's expiration and next week's earnings. Let me break this down:
- 💣 Strike Concentration: All strikes between $985-$1,020 (ALL above current price of $951.69)
- 🎯 Deep In-The-Money Puts: ALL these puts are ITM with intrinsic values from $33.31 to $68.31
- 📊 Volume vs OI: Volume dwarfing open interest = NEW positions being opened
- 🔥 Unusual Score: 10/10 - Activity level that happens NEVER!
- ⏰ Timing: Expiring TOMORROW - pure event-driven positioning
Translation for us regular folks: This is massive ITM put buying with immediate intrinsic value! With strikes from $985-$1,020 all above the current $951.69 price, these puts are already profitable. Someone's either protecting huge long positions or aggressively betting on continued weakness ahead of earnings. This isn't waiting for a crash - it's already banking on the recent decline!
📈 Technical Setup / Chart Check-Up
COST Year-to-Date Performance with Volume Analysis
Looking at the YTD chart, COST shows concerning patterns:
- YTD Return: +4.7% (lagging the S&P 500)
- Current Level: $952.36 - struggling to hold $950
- 52-Week High: $1,078 (hit in February - down 12% from peak)
- Key Support: $900 (next major level if $950 breaks)
- Max Drawdown: -17.3% (hasn't fully recovered)
- Volatility: 23.1% (elevated for a defensive stock)
The stock peaked in March above $1,050 and has been in a steady downtrend. Volume spikes in March and June show distribution (smart money selling). Currently testing critical $950 support - a break could accelerate selling.
🎪 Catalysts
📅 Upcoming Events
- September 25, 2025: Q4 2025 Earnings - Wall Street expects EPS of $5.79 (12.4% YoY growth)
- September 2025: First membership fee increase impact fully reflected
- FY2026: 27-29 new warehouse openings including 10 international
🔥 Recent Developments
- September 2024: Membership fees raised from $60 to $65 (Gold) and $120 to $130 (Executive)
- Q3 2025: E-commerce growth of 14.8% - nearly double overall sales growth
- 2025: Buy now, pay later partnership with Affirm launched
- Current: Trading at 54.2x P/E ratio vs industry average of 21.6x
🎲 Price Targets & Probabilities
Based on analyst consensus of $1,110 and current put positioning:
😰 Bear Case ($900-930) - 45% chance
- Earnings miss on margin pressure
- Charlie Munger's warning about 40x P/E proves prescient
- Put buyers profit massively
- Put Payoff: $70-100 per contract (40-100% return overnight)
😐 Base Case ($940-960) - 35% chance
- In-line earnings with cautious guidance
- Stock consolidates at lower valuation
- Membership fee increases offset margin pressure
- Put Payoff: $30-60 per contract (modest gains)
🚀 Bull Case ($970+) - 20% chance
- Earnings beat with strong membership metrics
- International expansion accelerates
- Put buyers lose most premium
- Put Payoff: Total loss of premium
💡 Trading Ideas
🛡️ Conservative: "Wait for Dust to Settle"
Stay in cash until after earnings
- Let the $52M put wall resolve
- Enter COST shares if it holds $900
- Avoid the volatility crush entirely
- Risk: Missing potential bounce if puts are just hedges
⚖️ Balanced: "Sell the Volatility"
Sell COST Oct $920 Puts (collect ~$15 premium)
- Benefit from elevated implied volatility
- Comfortable owning COST at $905 effective cost
- Monthly income strategy
- Risk: Assignment if stock drops below $920
🚀 Aggressive: "Follow the Smart Money"
Buy COST Sep 27 $940 Puts (~$12 premium)
- Lower cost than tomorrow's expiration
- Captures earnings volatility
- Aligned with institutional positioning
- Maximum loss: $1,200 per contract
⚠️ Risk Factors
Let's keep it real - here's what could go wrong:
- 📊 Valuation Risk: At 54x earnings, any disappointment gets punished hard
- 🛒 Consumer Slowdown: Bulk buying suffers when wallets tighten
- 🏪 Competition: Sam's Club gaining share with aggressive pricing
- 📉 Technical Breakdown: MACD Death Cross signaling further weakness
- 💰 Margin Pressure: Higher merchandise costs eating into profits
🎯 The Bottom Line
Here's the deal: When institutions drop $52 million on puts expiring TOMORROW, they're not gambling - they're either protecting massive positions or have conviction about near-term downside. This activity is literally unprecedented - 6,654x normal size!
The Action Plan:
✅ If you own COST: Consider protective puts or trimming position before earnings
✅ If you're watching: Wait for this put wall to resolve - don't fight the whale
✅ If you're bearish: The smart money agrees, but premiums are expensive
Mark your calendar for September 25th - that's when Q4 earnings will either validate this massive put positioning or leave someone with a $52M lesson. With the stock at 54x earnings (way above Munger's 40x warning), membership fee increases kicking in, and aggressive expansion plans, there's a lot riding on execution.
Remember: These put buyers can afford to lose $52M - make sure your position size matches YOUR risk tolerance, not theirs! 💪
Options involve risk and are not suitable for all investors. This analysis is for educational purposes only and not investment advice. Always do your own research and consult with a financial advisor.