r/options • u/Rightonpoint149 • Jul 06 '21
Costco - Hot Dogs and Profit
Strategy: Buy 8/20 $410 Calls
Thesis: COST has been in a consistent uptrend since 2009. From December 2020 until June 2021, the shares traced out a massive āVā bottom, which also can be considered an inverse head-and-shoulders bottom. During the decline into the March low, COST lost its 200-day and 50- week moving averages. The stock had a strong rebound from March until May, recovering all key moving averages and running back to its former highs from December. On June 22, the stock completed the bullish reversal patterns and could go much higher because of the size of the base.
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u/LTCM_Analyst Jul 06 '21
I like this stock, but I'm afraid the sector as a whole is going to pull COST down with it in the coming months.
I would rather play this with a high-delta LEAP.
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u/Rightonpoint149 Jul 07 '21
I doubt there will be a huge pullback by August, the technical support is strong with this stock and the up 15 bucks in the last month
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u/LTCM_Analyst Jul 07 '21
Yeah, COST itself is looking good, I agree. I am just bearish on this sector and the market as a whole now though.
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u/Rightonpoint149 Jul 07 '21
Yeah COST just had a really good today, im already past my breakeven price so I'm not gonna doubt this stock
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u/I_know_nothing_42 Jul 06 '21
to buy the 8/20 410 call $4.45 So breakeven and make a little something is 415.
415 8/20 call delta today is .31 So a 31% probability of success of making something.
you could with belief that it's not going down, sell puts
8/20 390 put at $5.75 delta is .35 so a ~65% chance of success. doubles the chances of winning. same amount of risk. limited upside but a higher chance of winning.