"Costco's stock has gained 13% year to date in 2026, climbing from roughly $861 at the end of 2025 to nearly $974 as of late March. For a common shareholder, that is a straightforward gain. For a COSW holder, the picture is more complicated."
"COSW generates weekly distributions by writing call options against Costco shares. The premium collected is the income source, but those calls cap the fund's upside: if Costco rallies above the strike price in a given week, the fund does not fully capture that move."
"Costco posted revenue of $69.6 billion in its most recent quarter, up 9.2% year over year, with net income rising 13.8% to $2.035 billion. Membership renewal rates held at 89.7% globally, and e-commerce comparable sales surged 22.6%."
"A stock trading at 50x earnings that keeps beating estimates is likely to move higher in bursts. Each burst represents capital gains that COSW holders may not fully benefit from due to the capped upside."
Costco has been a reliable investment for yield-seeking investors, leading to the launch of the Roundhill COST WeeklyPay ETF. This fund targets 120% of Costco's weekly total return while providing weekly income through an options-based structure. However, this approach introduces risks, particularly the capping of upside potential when Costco's stock price rises significantly. Despite strong fundamentals, including revenue growth and high membership renewal rates, COSW holders may miss out on capital gains due to the fund's strategy of writing call options.
Read at 24/7 Wall St.
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