How Maya Turned COST's Dip into a 94% Winner

Picture this: On December 31, 2025, COST had just experienced a notable drop, closing at $865.35. While many traders were hesitant, fearing further declines, Maya recognized an opportunity for a strategic entry. With a methodical approach rooted in technical analysis, Maya entered a $865.00 / $870.00 call spread, positioning herself for a potential rebound.

RSI (Relative Strength Index)

The RSI measures the speed and magnitude of price movements on a scale of 0-100. Readings below 30 indicate oversold conditions, while readings above 70 suggest overbought territory.

At entry, COST's RSI was at 40.2 (Neutral). This reading indicated that the stock was not yet in oversold territory, suggesting that there was still potential for upward movement without being excessively overbought. Such neutral conditions offered a conducive environment for a bullish trade.

Bollinger Bands

Bollinger Bands measure volatility by plotting bands above and below a moving average. When price touches the lower band, it often signals a potential bounce opportunity.

At entry, COST was trading at the Middle Band. This positioning indicated there was room for movement upwards, providing a favorable setup for Maya's call spread strategy.

MACD (Moving Average Convergence Divergence)

The MACD is a cornerstone of trend-following analysis, showing momentum direction through crossovers of its signal lines.

COST showed Bullish Momentum at entry. The MACD histogram confirmed that momentum was building, aligning with Maya's bullish thesis for the trade. This bullish signal further solidified her decision to enter the call spread.

The Trade Setup: COST $865.00-$870.00 Call Spread

To trade this setup, Maya used a Call Spread—a straightforward options strategy that allows participation in the upside while strictly capping risk.

Maya targeted the $865.00 / $870.00 spread. This involves buying the $865.00 call and simultaneously selling the $870.00 call with the same expiration.

Why This Setup Works:

• Capital Efficiency: The spread was entered for approximately $4.85 per contract.
• Defined Risk: Maximum loss is limited to the premium paid, ensuring calculated risk management.
• Risk/Reward: If COST closes at or above $870.00 at expiration, the spread achieves its maximum value of $1.00, delivering potential 100% ROI.

What happened next was a testament to disciplined trading. Over the next 36 days, COST rallied from its entry price of $865.35 to an impressive $950.98 at expiration. While the journey saw fluctuations, the overall trend remained positive, driven by a combination of strong market sentiment and favorable technical indicators.

The Exit

Maya's exit was triggered on February 6, 2026, when the profit target was reached. The final result was a gain of $235, translating to a remarkable 94.0% ROI. This outcome was not left to chance; it was the result of a systematic approach to trading, leveraging technical indicators to guide decisions.

The Lesson

For traders, the key takeaway from this trade is the importance of technical analysis in decision-making. By utilizing the RSI, Bollinger Bands, and MACD, traders can identify optimal entry and exit points, enhancing their chances of success. This disciplined approach to trading, combined with strict risk management, can pave the way for consistent profitability.