COST trade ideas
$COST Everyone loves Costco, but not at $240 & 30 P/EIts is not uncommon for NASDAQ:COST to fall on a good earnings report and it always bounces back within a few months, longs are probably a bit apprehensive going into earnings as selling has been quite intense this week. When consulting they technicals the stock has actually been showing bearish divergences since early May, as the price climbed the RSI, MACD and CMF have all steadily dropped.
Sentiment in the market is poor, but Costco is one of those companies immune to certain economics that affect others, consumers always want good value and Costco offers that, in good and bad times. The subscription model also provides recurring guaranteed income, which investors love but at a 30 P/E ratio it getting a little expensive
The best policy is to wait and see on this, because if the breakout fails and support breaks a drop to $220 is very possible to fill that gap
THE WEEK AHEAD: COST EARNINGS; EEM, OIH, XOP, TSLAEARNINGS
COST (46/25) announces earnings on Thursday after market close, so look to put on a play in the waning hours of the regular New York session.
Pictured here is an iron condor in the July (53 days) expiry with the short options at their respective 20 delta strikes. Preliminarily, it's paying 1.55 at the mid price, a smidge shy of one-third the width of the wings, with break evens wide of the expected move at 228.45/266.55 and delta/theta metrics of -1.41/1.93, and a buying power effect of 3.45.
For those who don't like waiting as long for their candy, the June monthly (28 days) iron condor with the shorties set up nearest the 20 delta -- the 230/235/260/265 is paying spot on one-third the width of 1.68 with break evens at 233.32/261.68, delta/theta metrics of -1.65/3.80, and a buying power effect of 3.32.
As of Friday close, the May 31st (4 days) to June volatility contraction is from 34.7% to 24.7% or about 28.8%.
Look to manage intratrade by rolling the untested side toward current price on approaching worthless with a 50% max take profit target.
BROAD MARKET
Majors are at the lower end of their 52-week ranges with background implied in QQQ and IWM in the low 20's; SPY and EFA, in the teens:
EEM (32/21)
QQQ (27/21)
IWM (28/20)
SPY (27/16)
EFA (23/16)
The EEM July 19th 36/40/40/44 iron fly is paying 25% of the width of the longs (8-wide) at 2.05 and break evens right at the expected move of 37.95/42.05, delta/theta metrics of -9.01/1.09, with a buying power effect of 1.95. Look to take profit at 25% max, as you would with a short straddle. Generally, these can't be effectively managed intratrade to delta balance without adding setup, so any trade management has to occur toward the back end of the cycle (i.e., taking untested off at approaching worthless, rolling out tested, selling untested side against in new cycle, assuming that the roll out of the tested and the sell against can be done for a net credit).
QQQ is paying slightly more than one-third the width of the wings for the short option strikes nearest the 20's -- the 163/166/188/191: 1.16 credit, break evens at 164.84/189.16, delta/theta metrics of -3.55/1.55, and a buying power effect of 1.84. Manage intratrade by rolling in untested on approaching worthless toward current price; 50% max take profit.
A similarly delta'd IWM setup is paying 1.06: the July 19th 137/141/159/162, with break evens of 139.94/160.06, delta/theta metrics of -1.82/1.34, and a buying power effect of 1.94. 50% max take profit. Manage intratrade by rolling in untested on approaching worthless toward current price; 50% max take profit.
SECTOR EXCHANGE-TRADED FUNDS
Top 5 By Rank: GDXJ (45/28); ASHR (42/28); OIH (40/37); XLB (41/31); EEM (32/21).
The only short straddle paying in excess of 10% of the value of the stock is OIH with the July 19th 14 short straddle paying 1.51 versus 13.81 spot. The at-the-money short straddle in the closely correlated XOP (30/34), the July 19th 27, is also paying > 10%: 2.82 versus 27.12 spot. Manage intratrade by rolling in untested side on approaching worthless to cut net delta in half without inverting to a width greater than credits received; 25% max take profit.
SINGLE NAME WITH EARNINGS IN THE REAR VIEW
TSLA (62/83). The July cycle iron condor set up nearest the 20's -- the 150/155/235/240 is paying 1.78 at the mid, -31/1.65 delta/theta. Markets are wide, so look to do some price discovery if you want to get in on a play. Manage intratrade by rolling in untested on approaching worthless toward current price; 50% max take profit.
COST has broke through supportCOST looks pretty solid above this support now. Should have room to run for a 2R gain.
Costco ASCENDING TRIANGLEIncreasing lows, equal highs, at least two swings passed = bullish surge towards $254
Also: Kumo Cloud indicators gave us a strong bullish signal on May 16 and the cloud is showing strong support
Good time to buy Costco (COST)Weak buy signal with the red+blue cross underneath the Kumo, and lagging strand is showing consolidation. This typically means "wait for more information" but we are approaching a strong support in the trend channel and momentum is pointing towards a reversal.
I'd keep a stop loss around the 238 level, but even if we unload at 247 that's a solid 3:1 risk to reward ratio.
COST - ABC Completed, Time to retrace? You can see the negative divergence on this chart. Stock been pumping up and momentum is vanishing.
I am shorting from up here, puts 2 weeks out.
New ATH for CostcoNew all time high for Costco. Previous ATH at 45 is now resistance. Price should stay up and keep going
COSTco Double TopShorting the double top, $230 target but I might bail around $235 if I can flip the puts in the next couple of days.
Levels for costcoNeeds to break yellow lines to push higher. Needs to break first blue line to push lower.
$Cost Going DownClear bearish divergence at this top
Previously rejected at 240 area and will do so again
First stop 220 which is the .382 retracement and first strong support level
COST: Welcome to CostCo Earnings, I love you!This one was truly a no-brainer for me the other day, but I was waiting to publish on the earnings news. COST is up 5% is afterhours with a potential blowout day tomorrow on market open. I also believe that the financial media will latch onto this good news from them with a fervor in hopes of pushing back a little on this current bear market sell off index wide. I do believe that COST has a possible long run up, but I'll be setting my stops tight until I see upward action for longer than a week. I bought into this a few days ago anticipating that the post-earnings action would be an upward reversion towards a long term mean because even though COST did rise slightly in January, they didn't experience a stellar blowout like some others and I felt that they were due with their holiday shopping earnings report the same as TGT and KSS. I do have profits from TGT and stayed out of KSS because of higher volatility, and it appears the cautious value investor in me made the right decision in this choppy market.
MACD has been floating mildly flatly with only a minor dip today that bounced back of the signal line in after hours activity. The bullish breakout in January wasn't strong enough to pull up the ADX trend strength index above a 20 yet, and I suspected that the +DI would bounce off the -DI as a support in the couple of days leading up into earnings to have a sharp breakout above the 50 and 200 day moving averages as resistance is being tested and the bulls will win have won out on earnings in pre-market. RSI appears to be testing a resistance near 50 as well, but momentum is beginning to look positive and may remain so if the breakout settles into a strong trend channel upward. Money flow is positive, and it looks like the few bears that bet on a bad earnings call are going to get squeezed out fairly quickly for some easy bull trap bait. Volume began to rise right before the call, and will break out hard tomorrow on market open, too.
Welcome to CostCo, I love you!
Looks like a good entry point.Costco is tempting at these prices since it often trades in the 140.00 plus range. Indicators are showing us a good entry, let's see what it can do.
COSTCO, lolDidn't see this yesterday afternoon. Look at the end of day action on the 15 minute chart, obvious short, looks like we missed out.
It's played out already, but man I wish one of my followers or guys I follow posted this one.
COST Costco Wholesale Is Setting Up For A Large ShortCOST recently broke below a major support ($217) as well as below the 200EMA.
I will be looking for short opportunities at the retest of the $217 structure level.
Cost possible scenariosthink we continue down 2moro but just my opinion. Cashed my put at 100% on drop today.
