HEI Covered Call Strategy
HEI (HEICO Corporation), in the Industrials sector, (Aerospace & Defense industry), listed on NYSE.
HEICO Corporation operates as a global enterprise through its various subsidiaries, specializing in the design, manufacturing, and distribution of an extensive range of products and services tailored for the aerospace, defense, and electronics industries. The company's Flight Support Group (FSG) division is a principal supplier of essential replacement components for jet engines and aircraft. Its offerings include specialized thermal insulation products, such as blankets and reusable systems, along with a variety of bespoke parts. The FSG also serves as a distributor for a wide array of hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components, primarily targeting the commercial, regional, and general aviation sectors. Additionally, this segment provides comprehensive repair and overhaul services, covering jet engine and aircraft parts, avionics, instruments, composites, and flight surfaces for commercial aircraft, as well as navigation systems and various instruments used in military planes. HEICO's Electronic Technologies Group (ETG) delivers a broad and sophisticated portfolio of electronic solutions.
HEI (HEICO Corporation) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $48.09B, a trailing P/E of 60.97, a beta of 1.04 versus the broader market, a 52-week range of 256.11-361.69, average daily share volume of 688K, a public-listing history dating back to 1980, approximately 10K full-time employees. These structural characteristics shape how HEI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.04 places HEI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 60.97 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. HEI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on HEI?
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 HEI snapshot
As of June 30, 2026, spot at $354.78, ATM IV 34.10%, IV rank 50.99%, expected move 9.78%. The covered call on HEI 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 HEI specifically: HEI IV at 34.10% is mid-range versus its 1-year history, so the credit collected on a HEI covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 9.78% (roughly $34.68 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 HEI expiries trade a higher absolute premium for lower per-day decay. Position sizing on HEI should anchor to the underlying notional of $354.78 per share and to the trader's directional view on HEI stock.
HEI covered call setup
The HEI 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 HEI near $354.78, the first option leg uses a $370.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HEI 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 HEI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $354.78 | long |
| Sell 1 | Call | $370.00 | $4.60 |
HEI covered call risk and reward
- Net Premium / Debit
- -$35,018.00
- Max Profit (per contract)
- $1,982.00
- Max Loss (per contract)
- -$35,017.00
- Breakeven(s)
- $350.18
- Risk / Reward Ratio
- 0.057
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.
HEI covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on HEI. 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% | -$35,017.00 |
| $78.45 | -77.9% | -$27,172.73 |
| $156.90 | -55.8% | -$19,328.46 |
| $235.34 | -33.7% | -$11,484.19 |
| $313.78 | -11.6% | -$3,639.91 |
| $392.22 | +10.6% | +$1,982.00 |
| $470.67 | +32.7% | +$1,982.00 |
| $549.11 | +54.8% | +$1,982.00 |
| $627.55 | +76.9% | +$1,982.00 |
| $705.99 | +99.0% | +$1,982.00 |
When traders use covered call on HEI
Covered calls on HEI are an income strategy run on existing HEI stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
HEI thesis for this covered call
The market-implied 1-standard-deviation range for HEI extends from approximately $320.10 on the downside to $389.46 on the upside. A HEI covered call collects premium on an existing long HEI position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether HEI will breach that level within the expiration window. Current HEI IV rank near 50.99% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on HEI should anchor more to the directional view and the expected-move geometry. As a Industrials name, HEI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HEI-specific events.
HEI 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. HEI positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HEI alongside the broader basket even when HEI-specific fundamentals are unchanged. Short-premium structures like a covered call on HEI carry tail risk when realized volatility exceeds the implied move; review historical HEI earnings reactions and macro stress periods before sizing. Always rebuild the position from current HEI chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on HEI?
- A covered call on HEI is the covered call strategy applied to HEI (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 HEI stock trading near $354.78, the strikes shown on this page are snapped to the nearest listed HEI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are HEI 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 HEI covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 34.10%), the computed maximum profit is $1,982.00 per contract and the computed maximum loss is -$35,017.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HEI covered call?
- The breakeven for the HEI covered call priced on this page is roughly $350.18 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 HEI market-implied 1-standard-deviation expected move is approximately 9.78%; 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 HEI?
- Covered calls on HEI are an income strategy run on existing HEI 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 HEI implied volatility affect this covered call?
- HEI ATM IV is at 34.10% with IV rank near 50.99%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.