COST Covered Call Analysis

The top-ranked covered call for Costco is the $1025 strike expiring 2026-04-17 (16 DTE), offering 25.6% annualized return with a delta of 0.39. It earns a CC Score of 54 out of 100. Data is updated daily after market close.

For Costco, delta 0.20–0.30 is a common range for covered calls. This gives 70–80% probability of the option expiring worthless while collecting meaningful premium. Lower delta (0.15–0.20) is more conservative, while 0.30–0.40 generates more income but has higher assignment probability.

The CC Score (0–100) ranks covered call opportunities across 7 dimensions: Income potential (22%), Safety (18%), Liquidity (18%), Underlying Quality (14%), Event Safety (12%), IV Opportunity (8%), and Execution Quality (8%). Higher scores mean better risk-adjusted opportunities. Sort by CC Score to find the best strike and expiration combo for Costco.

Weekly covered calls (7–14 DTE) offer faster theta decay and more flexibility but require active management. Monthly covered calls (30–45 DTE) balance time premium with less frequent rolling. For Costco, consider monthlies to collect more total premium per cycle. The CC Score ranks both DTE ranges so you can compare directly.

The primary risk is capped upside: if Costco rallies sharply, you are obligated to sell at the strike price and miss gains above it. At the current top-ranked $1025 strike (1.5% OTM), any rally beyond that level means you sell shares below market price. To contextualize: covered calls are best suited for sideways-to-mildly-bullish outlooks. If you expect a significant move higher, consider waiting to sell the call or using a wider strike. The CC Score penalizes strikes with elevated event risk to help you avoid the worst setups.

Costco's IV Rank is 20%, which is relatively low. Premiums may be thin. Consider waiting for IV to rise, using shorter DTE to maintain adequate annualized returns, or moving closer to the money if you are comfortable with the assignment risk.