Costco Wholesale Corp (COST) reported on May 30 that it had stable growth and free cash flow for its fiscal Q3 ended May 12. However, COST stock looks only slightly undervalued, given its recent runup. As a result, the best play here is to sell short out-of-the-money (OTM) put options to generate good income.
COST stock is at $809.89 as of Friday, May 31, up 14.9% from a recent low of $704.88 on April 4. The market was clearly expecting good results and the stock price ran up ahead of the results.
