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COST Covered Call Analysis: Proceed With Caution Weak · 55/100
Costco Wholesale Corp (Consumer Defensive) · $935.03 ·
Analysis generated Jul 24, 2026 ·
Data as of market close Jul 24
· Market closed — data may be from last trading day
Quick Take
COST is trading at $935.03 with RSI at 46 (neutral territory). Options IV is at 24% — 48% below its 30-day average of 45%. Neither RSI nor IV strongly favor selling calls right now. Consider waiting for better conditions or using a different strategy.
Technical Signals
RSI (14)
46
IV Today
23.5%
IV vs 30d Avg
-48%
MACD
bullish
ADX
11
MFI
40
The Setup
COST Covered Call
LONG STOCK
100 shares @ $935.03
SHORT CALL
$1010 Sep '26 · $9.15/sh
Net Cost
$92,588
Max Profit
+$8,412
Break-even
$925.88
Projected P&L at Target
+$8,412
(9.1%)
P&L at Expiry
P&L Scenarios
What happens at different COST prices by expiry:
| COST Price | Today | Aug 13 | Aug 31 | Sep 18 (exp) |
|---|---|---|---|---|
| $748 (-20%) | -$17,802 | -$17,788 | -$17,786 | -$17,786 |
| $795 (-15%) | -$13,188 | -$13,126 | -$13,110 | -$13,110 |
| $842 (-10%) | -$8,716 | -$8,528 | -$8,441 | -$8,435 |
| $888 (-5%) | -$4,551 | -$4,137 | -$3,827 | -$3,760 |
| $916 (-2%) | -$2,285 | -$1,706 | -$1,167 | -$955 |
| $935 (0%) ← now | -$899 | -$212 | +$506 | +$915 |
| $954 (+2%) | +$375 | +$1,161 | +$2,055 | +$2,785 |
| $982 (+5%) | +$2,063 | +$2,960 | +$4,069 | +$5,590 |
| $1010 (+8%) ← target | +$3,484 | +$4,435 | +$5,644 | +$8,412 |
| $1029 (+10%) | +$4,267 | +$5,221 | +$6,421 | +$8,412 |
| $1075 (+15%) | +$5,763 | +$6,624 | +$7,598 | +$8,412 |
| $1122 (+20%) | +$6,692 | +$7,381 | +$8,036 | +$8,412 |
Why This Strategy, Why Now
- RSI at 46
- IV -48% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 11 — range-bound, perfect for selling calls
- TTM Squeeze ON — breakout imminent, risky for capped strategies
Key Risks
COST has bullish momentum (MACD). If a positive catalyst emerges (earnings beat, product launch), the stock could gap past your strike. Consider rolling the call up if COST approaches the strike before expiry.
TTM Squeeze is ON — a volatility breakout may be imminent. If the breakout is to the upside, your short call will be tested quickly.