CSGP $1.1M Put Buy - Institutional Hedging Before Q3 Earnings!

📅 October 28, 2025 | 🐋 Major Institutional Move Detected

🎯 The Quick Take

Someone just loaded $1.1 MILLION worth of CSGP puts expiring November 21st! This massive trade bought 5,000 contracts at the $75 strike when the stock was trading at $78.83, just hours before Q3 earnings drop after market close today. With analysts expecting 19.3% revenue growth but a P/E ratio over 300x, this looks like sophisticated downside protection ahead of the results. Translation: Big money is hedging against potential disappointment!

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📊 Company Overview

CoStar Group, Inc. (CSGP) is a leading provider of commercial real estate data and marketplace listing platforms:
- Market Cap: $33.1 Billion
- Industry: Business Services
- Core Business: Commercial real estate data, analytics, and marketplace platforms including CoStar Suite, LoopNet, Apartments.com, and the rapidly growing Homes.com residential portal
- Current Price: $78.37 (as of market close)

CoStar operates flagship brands serving both commercial and residential property markets, with over 80% of its revenue classified as subscription-based. The company has recently expanded into residential real estate with aggressive investments in Homes.com (over $1 billion since 2021) and completed major acquisitions including Matterport for $1.6 billion and Domain Australia for $1.92 billion.

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💰 The Option Flow Breakdown

The Tape (October 28, 2025 @ 13:13:24):

Time	Symbol	Side	Buy/Sell	Type	Expiration	Premium	Strike	Volume	OI	Size	Spot	Option Price
13:13:24	CSGP	ASK	BUY	PUT	2025-11-21	$1.1M	$75	5K	700	5,000	$78.83	$2.25

🤓 What This Actually Means

This is a protective put purchase or outright bearish bet timed perfectly before earnings! The trader:

• 🎰 Paid $1.1M in premium for 5,000 $75 puts
• 📅 Expiration: November 21, 2025 (24 days away)
• 💵 Break-even: $72.75 ($75 strike - $2.25 premium)
• 🎯 Betting CSGP drops below $72.75 by monthly OPEX
• ⏰ Timing: Just HOURS before Q3 earnings announcement

Unusual Score: 🔥 EXTREME (636x average size) - This is extraordinary! This massive trade is 636 times larger than typical CSGP option activity. To put it in perspective: if normal trades are buying a car, this is purchasing the entire dealership chain! We've seen exactly ZERO trades this large in the past 30 days!

The timing is critical - this expires on November 21st monthly OPEX, which gives just enough time to capture post-earnings volatility and any guidance disappointment. Someone with deep pockets is either protecting a massive long position or making an aggressive bearish bet on the elevated valuation!

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📈 Technical Setup / Chart Check-Up

YTD Performance Chart

CSGP has had a rollercoaster ride in 2025! After touching a 52-week high of $97.43, the stock has pulled back to $78.37, down about 19.5% from its peak. 📉

The stock saw significant volatility following major acquisition announcements but has struggled to maintain momentum amid concerns about Homes.com's profitability timeline and the company's sky-high valuation.

Key observations:
- 📉 Off recent highs: Down 19.5% from 52-week high of $97.43
- 📊 Trading near 52-week low: Currently at $78.37, just above $68.41 low
- 🎢 Pre-earnings consolidation: Settling into support zone ahead of results
- 💪 Strong YTD base: Trading well above early 2025 levels despite pullback

Gamma-Based Support & Resistance Analysis

Current Price: $78.37

The gamma chart reveals critical levels that frame this bearish options trade:

🔵 Support Levels (Put Gamma):
- $75 (Strongest): 0.52M total gamma - THIS IS THE TRADE STRIKE! Major support just 4.3% below
- $70: 0.33M total gamma - Secondary support floor if $75 breaks
- $65: 0.12M total gamma - Deep support for major breakdown scenario

🟠 Resistance Levels (Call Gamma):
- $80 (Strongest): 1.64M total gamma - Immediate resistance just 2.1% above, massive wall here
- $85: 1.14M total gamma - Next major resistance level
- $90: 0.87M total gamma - Key psychological and gamma barrier

📊 Gamma Verdict: Net GEX bias is BULLISH with total call gamma (3.84M) significantly exceeding put gamma (1.64M), showing a 2.3:1 ratio. However, the $80 resistance represents a massive gamma wall that will make it difficult for market makers to let the stock break through. The $75 strike where puts were bought represents the strongest support zone - a smart defensive position!

The options market is essentially saying: "We're stuck in a $75-$80 box until something breaks." This put buyer is betting the break happens to the downside after earnings!

Implied Move Analysis

The options market is pricing in significant movement potential across different timeframes:

📅 Monthly OPEX (November 21, 2025 - 24 days):
- Implied Move: ±7.84% ($6.10)
- Range: $72.61 - $85.73
- 👀 This perfectly brackets the put strike at $75!

📅 Quarterly Triple Witch (December 19, 2025 - 52 days):
- Implied Move: ±9.61% ($7.48)
- Range: $71.22 - $87.87
- 🎯 Post-earnings digestion and strategic updates

📅 Yearly LEAPS (September 18, 2026 - 325 days):
- Implied Move: ±22.51% ($17.51)
- Range: $62.04 - $101.90
- 🚀 Covers full execution of Homes.com strategy and acquisition integration

Key Insight: The monthly implied move suggests CSGP could trade as low as $72.61 by November OPEX, which is BELOW the $72.75 break-even of this put trade! The options market is pricing in exactly the downside scenario this trader is betting on!

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🎪 Catalysts

🔜 Upcoming Events

Q3 2025 Earnings - October 28, 2025 (Today, After Market Close) 🎯

Wall Street expects strong top-line growth with revenue consensus of $826.06 million (representing 19.3% YoY growth), though company guidance was more conservative at $800-$805 million. EPS estimates sit at $0.18 per share, down 18.2% YoY from $0.22 in Q3 2024.

The critical question isn't whether CSGP beats earnings estimates - they've done so in each of the last four quarters with an average surprise of 26.10%. The real focus is on:
- Homes.com traffic growth and monetization progress
- Commercial real estate segment resilience amid macro headwinds
- Integration updates for Matterport and Domain acquisitions
- Any updated timeline on Homes.com profitability

Given the stock's 301x P/E ratio, even a beat might not be enough if guidance disappoints!

Homes.com Residential Expansion - Ongoing 📱

CoStar has invested over $1 billion in Homes.com since acquiring it in 2021. The platform achieved No. 2 ranking in U.S. residential portals with 104 million monthly unique visitors in Q1 2025, trailing only Zillow. Key growth drivers include:

• Expansion of dedicated sales force from 277 to 500+ representatives by end of 2025
• Three "major initiatives" planned for 2025 to add new revenue streams (details to be disclosed)
• Unique "your listing, your lead" model differentiating from competitors
• Goldman Sachs reaffirmed Buy rating with $105 price target following robust traffic growth in September 2025

However, in April 2025, CoStar formed a new Capital Allocation Committee to review Homes.com's investment and profitability timeline, responding to activist investor pressure from Third Point and D.E. Shaw. This signals increasing scrutiny on the return timeline for the billion-dollar bet.

A potential risk emerged in October 2025 when REcore Solutions LLC filed a lawsuit alleging breach of contract over unpaid MLS data licensing fees, which could threaten critical data access if not resolved favorably.

Matterport 3D Integration - Accelerating 🏗️

CoStar completed the acquisition of Matterport for approximately $1.6 billion in February 2025. This transformative deal brings:

• Over 14 million digitized spaces across 177 countries representing 50+ billion square feet
• AI-powered property intelligence and spatial data analytics
• Integration of immersive 3D virtual tours across CoStar's marketplace platforms (LoopNet, Apartments.com, Homes.com)
• Enhanced competitive positioning through superior property visualization

The technology is expected to significantly improve user engagement and create new monetization opportunities, but integration execution and revenue contribution timing remain key questions for today's earnings call.

Domain Australia Expansion - Newly Completed 🌏

CoStar completed its acquisition of Domain Holdings Australia in August 2025 for approximately $1.92 billion (AUD 3 billion). This strategic move provides:

• Access to 7 million average monthly Australian visitors
• Entry into Asia-Pacific residential market with established market position
• Application of proven Homes.com playbook to challenge incumbent players in Australia
• Expansion beyond traditional North American stronghold

This represents CoStar's largest geographic expansion and tests whether the company can replicate its U.S. success internationally.

✅ Recently Completed

Aggressive M&A Strategy - $3.5B+ Deployed in 2025 💰

CoStar has executed an aggressive acquisition strategy throughout 2025:
- Matterport acquisition ($1.6B) closed February 2025
- Domain Australia acquisition ($1.92B) closed August 2025
- Visual Lease acquisition (October 2024) enhancing lease administration platform

This deployment of over $3.5 billion in capital demonstrates management's confidence but also creates near-term profitability pressure and integration risk. The Capital Allocation Committee formed in April 2025 will be scrutinizing ROI on these investments closely.

International Market Entry - UK Presence Established 🇬🇧

Beyond Australia, CoStar acquired OnTheMarket.com in the UK in late 2023, and the International segment achieved its highest net new bookings in nearly three years due to revamped sales strategy. This validates the international expansion playbook and creates potential for further geographic growth.

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🎲 Price Targets & Probabilities

Based on gamma levels, implied move analysis, and upcoming catalysts:

🚀 Bull Case (25% probability)

Target: $85-$90 by November OPEX

Drivers:
- ✅ Blow-out Q3 earnings with raised full-year guidance
- ✅ Homes.com shows accelerating monetization progress
- ✅ Management provides clearer path to profitability for residential business
- ✅ Matterport/Domain integration highlights and revenue synergies
- ✅ Commercial real estate segment shows unexpected resilience

Key Levels:
- Break through $80 massive resistance with strong volume
- Clear $85 resistance (1.14M gamma wall)
- Implied move upper range of $85.73 validates momentum

Risk to the Trade: If CSGP rallies post-earnings, this put buyer loses the full $1.1M premium. Maximum pain would be a gap up through $85 on strong results.

⚖️ Base Case (45% probability)

Target: $75-$80 range through November OPEX

Drivers:
- ✅ Solid Q3 earnings meet expectations without major surprises
- ✅ Homes.com traffic growth continues but monetization timeline remains unclear
- ✅ Commercial real estate headwinds acknowledged but manageable
- ✅ Integration of acquisitions progressing but no immediate revenue impact
- ✅ Stock consolidates in current gamma support/resistance bands

Key Levels:
- Support holds at $75 (strongest put gamma level) - exactly where puts were bought!
- Resistance caps upside at $80 (massive 1.64M gamma wall)
- Trade range aligns perfectly with gamma boundaries

Perfect Scenario for Put Seller: CSGP trades in this range and puts expire worthless. The buyer would lose the full $1.1M premium.

😰 Bear Case (30% probability)

Target: $68-$72 by November OPEX

Drivers:
- ❌ Earnings disappoint or guidance reduced for Q4/2026
- ❌ Homes.com profitability timeline pushed further out
- ❌ Commercial real estate weakness worse than expected
- ❌ Integration challenges or costs exceed expectations for recent acquisitions
- ❌ Activist pressure intensifies on capital allocation
- ❌ REcore lawsuit escalates, threatening MLS data access
- ❌ Valuation concerns (301x P/E) trigger profit-taking

Key Levels:
- Break below $75 support triggers cascade toward $70
- $70 becomes critical secondary support
- Implied move lower range of $72.61 represents the target zone
- 52-week low of $68.41 is ultimate downside floor

Jackpot Scenario: Put buyer profits if CSGP breaks below $72.75 break-even. Each dollar below that level generates $5M in profit on the position!

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💡 Trading Ideas

🛡️ Conservative: Wait and Watch (Cash Position)

Play: Stay in cash and wait for post-earnings clarity

Rationale: With $1.1M in institutional puts purchased right before earnings, someone with edge is hedging hard. The implied volatility is elevated (7.84% monthly move expected), and the P/E of 301x leaves little room for error. Better to watch this one from the sidelines and enter after the smoke clears.

Entry Plan: Look for entry signals:
- If earnings beat and stock holds $80, consider bull position
- If stock breaks below $75 support, wait for bounce off $70
- If stock trades sideways post-earnings, consider iron condor at $75-$80

Why this works: Earnings are binary events, and this unusual put buying suggests smart money expects downside. Preservation of capital is a winning strategy here - there will be better entry points after the volatility settles.

⚖️ Balanced: Credit Spread at Support (Put Credit Spread)

Play: Bull put spread at the $75 gamma support (November 21st expiration)
- Sell CSGP $75 puts
- Buy CSGP $70 puts

Risk: $5 per spread max loss (spread width)
Reward: ~$1.50-2.00 credit per spread
Sweet Spot: CSGP stays above $75 (strongest gamma support)

Why this works: You're positioned at the exact same strike where institutions bought protection, but you're selling premium to them! The $75 level has massive put gamma support (0.52M), and the implied move lower bound is only $72.61 - giving you a nice cushion. Even in the bear case, you have $70 support as a backstop.

Entry Timing: Enter AFTER earnings announcement once IV settles down. If stock holds above $76, this becomes a high-probability trade.

🚀 Aggressive: Follow the Whale (Long Put Spread)

Play: Bear put spread mirroring institutional positioning (November 21st expiration)
- Buy CSGP $75 puts
- Sell CSGP $70 puts

Risk: ~$2-3 net debit per spread
Reward: $5 max profit (spread width)
Break-even: ~$72-73

Why this works: You're piggybacking on a $1.1M institutional trade with 636x unusual size! If they're right about downside, you participate with defined risk. The 7.84% implied monthly move gets you to $72.27 - right in your profit zone. Target earnings disappointment or guidance cut as the catalyst.

Entry Timing: Enter immediately after earnings IF:
- Stock gaps down below $76
- Guidance is cautious or disappointing
- Management can't provide clear Homes.com profitability timeline

High Risk Note: This is a contrarian earnings fade play. Only allocate 1-2% of portfolio max! If earnings are amazing, you lose your full debit. This is a surgical strike, not a portfolio position!

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⚠️ Risk Factors

💰 Extreme Valuation Premium

CSGP trades at a P/E ratio of 301.31, reflecting extraordinarily high growth expectations. This valuation demands flawless execution - any stumble in Homes.com monetization, acquisition integration, or core business growth could trigger severe multiple compression. The stock leaves zero room for disappointment.

🏠 Homes.com Profitability Uncertainty

The billion-dollar Homes.com investment requires years more before reaching profitability. Activist investors Third Point and D.E. Shaw obtained board representation in April 2025 and forced creation of a Capital Allocation Committee to scrutinize this investment. If traffic growth slows or monetization disappoints, the entire strategy faces questions.

🏢 Commercial Real Estate Headwinds

While the CoStar Portfolio segment grew 7.1% YoY in Q2 2025, ongoing challenges in commercial real estate - office vacancies, interest rates, economic uncertainty - could pressure this core revenue stream that historically drove the company's success.

⚖️ Data Access Litigation Risk

The October 2025 lawsuit by REcore Solutions LLC alleging breach of contract over unpaid MLS data licensing fees represents a potential vulnerability in Homes.com's data foundation. MLS data is critical for the platform's value proposition - any disruption could significantly impair the business.

🌐 Integration Execution Risk

CoStar has deployed over $3.5 billion on acquisitions in 2025 (Matterport $1.6B + Domain $1.92B). Successfully integrating these businesses, realizing synergies, and generating acceptable returns on invested capital creates massive execution risk. Management teams often overestimate synergies and underestimate integration challenges.

⚔️ Intensifying Competition

Zillow maintains the #1 position in residential with superior brand recognition, while established players like CBRE Group compete in commercial real estate. Homes.com must continue gaining market share in a market where network effects favor the incumbent leader. In Australia, Domain faces entrenched competition from REA Group.

💸 Capital Allocation Scrutiny

The activist involvement and formation of a Capital Allocation Committee signals investor concern about management's aggressive spending. If acquisitions fail to generate adequate returns, pressure could mount for strategy changes, management turnover, or even potential breakup scenarios.

🎢 Pre-Earnings Volatility

This $1.1M put purchase 636x average size happening hours before earnings is not normal! Someone with information advantage or sophisticated risk models is hedging aggressively. When you see this level of unusual activity, it often precedes significant price movement.

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🎯 The Bottom Line

Real talk: This $1.1M put purchase is not routine hedging - it's a massive, highly unusual bet placed with surgical precision just hours before earnings! When you see 636x normal size, that's institutional money with conviction, not some retail trader gambling.

The setup is textbook: Elevated valuation (301x P/E), aggressive acquisition spending under activist scrutiny, and a binary catalyst (earnings) that could go either way. The puts are positioned exactly at $75 gamma support - if that breaks, there's a fast slide to $70.

The message: Smart money is either protecting a large long position OR outright betting on downside. Either way, they're willing to pay $1.1M for protection through November OPEX. That's not confidence about earnings!

If you own CSGP:
- Consider trimming before earnings or buying protective puts at $75
- The 301x P/E leaves almost no margin for error
- Even a beat might not save you if guidance disappoints on Homes.com timeline

If you're watching:
- Wait for post-earnings clarity before entering
- The $75-$80 range offers clear gamma-defined boundaries
- A break below $75 triggers cascade toward $70 (strong put gamma support)
- A break above $80 signals all-clear and potential run to $85

If you're bearish:
- The implied monthly move of 7.84% suggests $72.61 is in play
- Put spreads offer defined-risk way to play the downside
- Target the $75-$70 spread to match institutional positioning
- But remember - betting against a 19.3% revenue growth story requires strong conviction!

Mark your calendar: 📅
- October 28th After Close - Q3 Earnings (the moment of truth!)
- November 21st - Monthly OPEX (when these puts expire)
- End of 2025 - Expected Homes.com major initiatives disclosure

Final thought: When you see $1.1M in puts bought at 636x normal size just hours before earnings, that's not background noise - that's a signal! Whether it's sophisticated hedging or outright bearish positioning, someone with deep pockets expects volatility. In this case, the smart money appears to be leaning toward protection rather than opportunity. Trade accordingly! 🎯

Disclaimer: Options trading involves substantial risk and is not suitable for all investors. This analysis is for educational purposes only and not financial advice. The unusualness score of 636x average size indicates this is an institutional-scale trade that individual traders should not attempt to replicate without proper risk management. Earnings announcements create binary outcomes with extreme volatility - position sizing is critical. Past performance doesn't guarantee future results. Always do your own research and consider consulting with a qualified financial advisor before making investment decisions.

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About CSGP: CoStar Group is a leading provider of commercial real estate data and marketplace listing platforms, operating flagship brands including CoStar Suite, LoopNet, Apartments.com, and Homes.com. With a $33.1 billion market cap and over 80% subscription-based revenue, CoStar serves both commercial and residential property markets across North America, UK, and Australia. The company has recently deployed over $3.5 billion on strategic acquisitions including Matterport ($1.6B) and Domain Australia ($1.92B).