Use Options To Leverage A Hot Costco Stock With Less Capital

Costco Stock Shows Strength, Bull Call Spread Suggested #

Costco (COST) stock displayed strength as it rebounded from the 21-day exponential moving average last week. A suggestion has been made to consider a bullish exposure using a bull call spread strategy that minimizes risk. This particular strategy involves buying a call option while simultaneously selling another call option at a higher strike price. By selling the out-of-the-money call, the cost of the trade is reduced but it also limits the potential upside. For instance, in the case of Costco stock, buying a 675-strike call option and selling a 680-strike call option at April expiration could result in a trade cost of $220, with a maximum profit potential of $280. This trade is risk-defined, with the maximum loss limited to the premium paid if the stock closes below 675 on April 19. The trade would break even at a price of around $677.20. Trade management suggests considering closing the position early for a loss if the stock drops below 630. Costco stock is currently highly ranked in its group, with a Composite Rating of 92, EPS Rating of 93, and Relative Strength Rating of 88. It is important to note that options trading carries significant risks, and investors should conduct thorough research and consult financial advisors before making any investment decisions.