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COST Covered Call Strategy: Is Now a Good Time to Sell Calls? Moderate · 65/100
Costco Wholesale Corp (Consumer Defensive) · $1012.28 ·
Analysis generated Oct 30, 2026 ·
Data as of market close Oct 30
Quick Take
COST is trading at $1012.28 with RSI at 67 (neutral territory). Options IV is at 0% — 100% below its 30-day average of 41%. While the stock is extended, IV is below average which means premiums aren't as rich. The trade still works but yields less income than usual.
Technical Signals
RSI (14)
67
IV Today
0%
IV vs 30d Avg
-100%
MACD
bullish
ADX
41
MFI
59
The Setup
COST Covered Call
LONG STOCK
100 shares @ $1012.28
SHORT CALL
$1090 Dec '26 · $14.2/sh
Net Cost
$99,808
Max Profit
+$9,192
Break-even
$998.08
Projected P&L at Target
+$9,192
(9.2%)
P&L at Expiry
P&L Scenarios
What happens at different COST prices by expiry:
| COST Price | Today | Nov 16 | Dec 2 | Dec 18 (exp) |
|---|---|---|---|---|
| $810 (-20%) | -$18,829 | -$18,826 | -$18,826 | -$18,826 |
| $860 (-15%) | -$13,789 | -$13,767 | -$13,764 | -$13,764 |
| $911 (-10%) | -$8,838 | -$8,738 | -$8,704 | -$8,703 |
| $962 (-5%) | -$4,147 | -$3,853 | -$3,667 | -$3,641 |
| $992 (-2%) | -$1,574 | -$1,112 | -$721 | -$605 |
| $1012 (0%) ← now | -$0 | +$581 | +$1,153 | +$1,420 |
| $1033 (+2%) | +$1,438 | +$2,131 | +$2,896 | +$3,445 |
| $1063 (+5%) | +$3,316 | +$4,134 | +$5,142 | +$6,481 |
| $1090 (+8%) ← target | +$4,693 | +$5,565 | +$6,671 | +$9,192 |
| $1114 (+10%) | +$5,664 | +$6,531 | +$7,610 | +$9,192 |
| $1164 (+15%) | +$7,121 | +$7,856 | +$8,641 | +$9,192 |
| $1215 (+20%) | +$7,915 | +$8,453 | +$8,921 | +$9,192 |
Why This Strategy, Why Now
- RSI at 67 — extended, ideal for selling calls
- IV -100% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 41 — strong trend, stock may run past strike
- No squeeze — no imminent breakout
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.
ADX at 41 indicates a moderately strong trend. In trending markets, covered calls cap your upside too early. Use a higher strike to leave more room.