HCI Covered Call Strategy
HCI (HCI Group, Inc.), in the Financial Services sector, (Insurance - Property & Casualty industry), listed on NYSE.
Headquartered in Tampa, Florida, HCI Group, Inc., originally established in 2006 as Homeowners Choice, Inc. before its name change in May 2013, is a diversified holding company. It conducts business across four main segments: property and casualty insurance, reinsurance, real estate, and information technology. Within Florida, the company underwrites residential insurance policies for homeowners, condominium owners, and tenants, offering coverage types such as homeowners, fire, flood, and wind-only, alongside reinsurance services. Its real estate portfolio encompasses ownership and management of waterfront properties, retail shopping centers, an office building, and various commercial investment properties. Additionally, HCI Group's technology division designs and builds web-based applications and mobile solutions, including its online policy administration platforms SAMS and Harmony, the end-to-end claims management system ClaimColony, and the mapping and data visualization tool AtlasViewer.
HCI (HCI Group, Inc.) trades in the Financial Services sector, specifically Insurance - Property & Casualty, with a market capitalization of approximately $2.34B, a trailing P/E of 6.74, a beta of 1.03 versus the broader market, a 52-week range of 144.75-210.5, average daily share volume of 189K, a public-listing history dating back to 2008, approximately 594 full-time employees. These structural characteristics shape how HCI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.03 places HCI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 6.74 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. HCI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on HCI?
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.
HCI snapshot
As of August 14, 2026, spot at $185.32, ATM IV 28.20%, IV rank 0.94%, expected move 8.08%. The covered call on HCI below is built from the August 14, 2026 end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 35-day expiry.
Why this covered call structure on HCI specifically: HCI IV at 28.20% is on the cheap side of its 1-year range, which means a premium-selling HCI covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 8.08% (roughly $14.98 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated HCI expiries trade a higher absolute premium for lower per-day decay. Position sizing on HCI should anchor to the underlying notional of $185.32 per share and to the trader's directional view on HCI stock.
HCI covered call setup
The HCI covered call below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With HCI at $185.32 on that close, the first option leg uses a $195.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HCI chain at a 35-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 HCI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $185.32 | long |
| Sell 1 | Call | $195.00 | $3.28 |
HCI covered call risk and reward
- Net Premium / Debit
- -$18,204.50
- Max Profit (per contract)
- $1,295.50
- Max Loss (per contract)
- -$18,203.50
- Breakeven(s)
- $182.05
- Risk / Reward Ratio
- 0.071
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.
HCI covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on HCI. 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% | -$18,203.50 |
| $40.98 | -77.9% | -$14,106.08 |
| $81.96 | -55.8% | -$10,008.67 |
| $122.93 | -33.7% | -$5,911.25 |
| $163.91 | -11.6% | -$1,813.83 |
| $204.88 | +10.6% | +$1,295.50 |
| $245.86 | +32.7% | +$1,295.50 |
| $286.83 | +54.8% | +$1,295.50 |
| $327.80 | +76.9% | +$1,295.50 |
| $368.78 | +99.0% | +$1,295.50 |
When traders use covered call on HCI
Covered calls on HCI are an income strategy run on existing HCI stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
HCI thesis for this covered call
The market-implied 1-standard-deviation range for HCI extends from approximately $170.34 on the downside to $200.30 on the upside. A HCI covered call collects premium on an existing long HCI position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether HCI will breach that level within the expiration window. Current HCI IV rank near 0.94% 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 HCI at 28.20%. As a Financial Services name, HCI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HCI-specific events.
HCI 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. HCI positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HCI alongside the broader basket even when HCI-specific fundamentals are unchanged. Short-premium structures like a covered call on HCI carry tail risk when realized volatility exceeds the implied move; review historical HCI earnings reactions and macro stress periods before sizing. Always rebuild the position from current HCI chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on HCI?
- A covered call on HCI is the covered call strategy applied to HCI (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 HCI stock at $185.32 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed HCI chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are HCI 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 HCI covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 28.20%), the computed maximum profit is $1,295.50 per contract and the computed maximum loss is -$18,203.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HCI covered call?
- The breakeven for the HCI covered call priced on this page is roughly $182.05 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The HCI market-implied 1-standard-deviation expected move in the same options snapshot is approximately 8.08%; 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 HCI?
- Covered calls on HCI are an income strategy run on existing HCI 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 HCI implied volatility affect this covered call?
- HCI ATM IV is at 28.20% with IV rank near 0.94%, 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.