Buying COST call contracts.

Costco Wholesale Co. (COST) is a profitable and very popular retail play that has pulled back sharply alongside the broad market. This is an example of a very good stock being indiscriminately sold despite strong profits and reliable growth..

Buying call contracts at this level gives us a chance to profit if COST moves back towards its recent highs. And buying in-the-money call contracts helps manage risk as these calls will retain some value even if shares pull back.