HIPS Covered Call Strategy
HIPS (GraniteShares HIPS US High Income ETF), in the Financial Services sector, (Asset Management industry), listed on AMEX.
HIPS offers a twist on the popular multi-asset income space: a focus on pass-through securities (those that pass on most of their income to their owners). The owners pay taxes on that income, while the entities themselves dont, thereby eliminating the double taxation associated with stock dividends. The portfolio allocates equally to four alternative income segments: closed-end funds (CEFs), business development companies (BDCs), real estate investment trusts (REITs), and energy master limited partnerships (MLPs). The top 10 securities with the highest dividend yield and lowest volatility in each segment are selected and weighted equally. It should be noted that while income from REITs, MLPs and BDCs can be high, these are typically taxed at ordinary-income rates instead of the beneficial qualified dividends rate. As such, investors in taxable accounts should consider their after-tax yield.
HIPS (GraniteShares HIPS US High Income ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $102.7M, a beta of 0.61 versus the broader market, a 52-week range of 11.28-12.46, average daily share volume of 57K, a public-listing history dating back to 2015. These structural characteristics shape how HIPS etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.61 indicates HIPS has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HIPS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on HIPS?
A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income.
Current HIPS snapshot
As of June 30, 2026, spot at $11.54, ATM IV 6.00%, IV rank 1.02%, expected move 1.72%. The covered call on HIPS below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 17-day expiry.
Why this covered call structure on HIPS specifically: HIPS IV at 6.00% is on the cheap side of its 1-year range, which means a premium-selling HIPS covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 1.72% (roughly $0.20 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated HIPS expiries trade a higher absolute premium for lower per-day decay. Position sizing on HIPS should anchor to the underlying notional of $11.54 per share and to the trader's directional view on HIPS etf.
HIPS covered call setup
The HIPS covered call below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With HIPS near $11.54, the first option leg uses a $12.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HIPS chain at a 17-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 HIPS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $11.54 | long |
| Sell 1 | Call | $12.00 | $0.08 |
HIPS covered call risk and reward
- Net Premium / Debit
- -$1,146.00
- Max Profit (per contract)
- $54.00
- Max Loss (per contract)
- -$1,145.00
- Breakeven(s)
- $11.46
- Risk / Reward Ratio
- 0.047
Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium.
HIPS covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on HIPS. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -99.9% | -$1,145.00 |
| $2.56 | -77.8% | -$889.95 |
| $5.11 | -55.7% | -$634.91 |
| $7.66 | -33.6% | -$379.86 |
| $10.21 | -11.5% | -$124.82 |
| $12.76 | +10.6% | +$54.00 |
| $15.31 | +32.7% | +$54.00 |
| $17.86 | +54.8% | +$54.00 |
| $20.41 | +76.9% | +$54.00 |
| $22.96 | +99.0% | +$54.00 |
When traders use covered call on HIPS
Covered calls on HIPS are an income strategy run on existing HIPS etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
HIPS thesis for this covered call
The market-implied 1-standard-deviation range for HIPS extends from approximately $11.34 on the downside to $11.74 on the upside. A HIPS covered call collects premium on an existing long HIPS position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether HIPS will breach that level within the expiration window. Current HIPS IV rank near 1.02% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on HIPS at 6.00%. As a Financial Services name, HIPS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HIPS-specific events.
HIPS covered call positions are structurally neutral to slightly bullish; the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. HIPS positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HIPS alongside the broader basket even when HIPS-specific fundamentals are unchanged. Short-premium structures like a covered call on HIPS carry tail risk when realized volatility exceeds the implied move; review historical HIPS earnings reactions and macro stress periods before sizing. Always rebuild the position from current HIPS chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on HIPS?
- A covered call on HIPS is the covered call strategy applied to HIPS (etf). The strategy is structurally neutral to slightly bullish: A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income. With HIPS etf trading near $11.54, the strikes shown on this page are snapped to the nearest listed HIPS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are HIPS covered call max profit and max loss calculated?
- Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium. For the HIPS covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 6.00%), the computed maximum profit is $54.00 per contract and the computed maximum loss is -$1,145.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HIPS covered call?
- The breakeven for the HIPS covered call priced on this page is roughly $11.46 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current HIPS market-implied 1-standard-deviation expected move is approximately 1.72%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a covered call on HIPS?
- Covered calls on HIPS are an income strategy run on existing HIPS etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
- How does current HIPS implied volatility affect this covered call?
- HIPS ATM IV is at 6.00% with IV rank near 1.02%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.