FHN Covered Call Strategy
FHN (First Horizon Corporation), in the Financial Services sector, (Banks - Regional industry), listed on NYSE.
First Horizon Corporation operates as the bank holding company for First Horizon Bank that provides various financial services. The company operates through three segments: Regional Banking, Specialty Banking, and Corporate. It offers general banking services for consumers, businesses, financial institutions, and governments. The company also underwrites bank-eligible securities and other fixed-income securities eligible for underwriting by financial subsidiaries; sells loans and derivatives; and offers advisory services. In addition, it offers various services, such as mortgage banking; title insurance and loan-closing; brokerage; correspondent banking; nationwide check clearing and remittance processing; trust, fiduciary, and agency; equipment finance; and investment and financial advisory services. Further, the company sells mutual fund and retail insurance products; and credit cards.
FHN (First Horizon Corporation) trades in the Financial Services sector, specifically Banks - Regional, with a market capitalization of approximately $11.12B, a trailing P/E of 10.95, a beta of 0.63 versus the broader market, a 52-week range of 19.04-26.56, average daily share volume of 5.2M, a public-listing history dating back to 1980, approximately 7K full-time employees. These structural characteristics shape how FHN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.63 indicates FHN has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. The trailing P/E of 10.95 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. FHN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on FHN?
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 FHN snapshot
As of May 15, 2026, spot at $23.59, ATM IV 28.00%, IV rank 17.19%, expected move 8.03%. The covered call on FHN 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 98-day expiry.
Why this covered call structure on FHN specifically: FHN IV at 28.00% is on the cheap side of its 1-year range, which means a premium-selling FHN covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 8.03% (roughly $1.89 on the underlying). The 98-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated FHN expiries trade a higher absolute premium for lower per-day decay. Position sizing on FHN should anchor to the underlying notional of $23.59 per share and to the trader's directional view on FHN stock.
FHN covered call setup
The FHN 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 FHN near $23.59, the first option leg uses a $25.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FHN chain at a 98-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 FHN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $23.59 | long |
| Sell 1 | Call | $25.00 | $0.88 |
FHN covered call risk and reward
- Net Premium / Debit
- -$2,271.50
- Max Profit (per contract)
- $228.50
- Max Loss (per contract)
- -$2,270.50
- Breakeven(s)
- $22.72
- Risk / Reward Ratio
- 0.101
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.
FHN covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on FHN. 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 | -100.0% | -$2,270.50 |
| $5.22 | -77.9% | -$1,749.02 |
| $10.44 | -55.7% | -$1,227.55 |
| $15.65 | -33.6% | -$706.07 |
| $20.87 | -11.5% | -$184.59 |
| $26.08 | +10.6% | +$228.50 |
| $31.30 | +32.7% | +$228.50 |
| $36.51 | +54.8% | +$228.50 |
| $41.73 | +76.9% | +$228.50 |
| $46.94 | +99.0% | +$228.50 |
When traders use covered call on FHN
Covered calls on FHN are an income strategy run on existing FHN stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
FHN thesis for this covered call
The market-implied 1-standard-deviation range for FHN extends from approximately $21.70 on the downside to $25.48 on the upside. A FHN covered call collects premium on an existing long FHN position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether FHN will breach that level within the expiration window. Current FHN IV rank near 17.19% 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 FHN at 28.00%. As a Financial Services name, FHN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FHN-specific events.
FHN 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. FHN positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FHN alongside the broader basket even when FHN-specific fundamentals are unchanged. Short-premium structures like a covered call on FHN carry tail risk when realized volatility exceeds the implied move; review historical FHN earnings reactions and macro stress periods before sizing. Always rebuild the position from current FHN chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on FHN?
- A covered call on FHN is the covered call strategy applied to FHN (stock). 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 FHN stock trading near $23.59, the strikes shown on this page are snapped to the nearest listed FHN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FHN 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 FHN covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 28.00%), the computed maximum profit is $228.50 per contract and the computed maximum loss is -$2,270.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FHN covered call?
- The breakeven for the FHN covered call priced on this page is roughly $22.72 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 FHN market-implied 1-standard-deviation expected move is approximately 8.03%; 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 FHN?
- Covered calls on FHN are an income strategy run on existing FHN stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
- How does current FHN implied volatility affect this covered call?
- FHN ATM IV is at 28.00% with IV rank near 17.19%, 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.