HESM Bull Call Spread Strategy
HESM (Hess Midstream LP), in the Energy sector, (Oil & Gas Midstream industry), listed on NYSE.
Hess Midstream LP owns, develops, operates, and acquires midstream assets. The company operates through three segments: Gathering; Processing and Storage; and Terminaling and Export. The Gathering segment owns natural gas gathering and compression; crude oil gathering systems; and produced water gathering and disposal facilities. Its gathering systems consists of approximately 1,350 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 450 million cubic feet per day; and crude oil gathering system comprises approximately 550 miles of crude oil gathering pipelines. The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota. The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; and crude oil rail cars, as well as Johnson's Corner Header System, a crude oil pipeline header system.
HESM (Hess Midstream LP) trades in the Energy sector, specifically Oil & Gas Midstream, with a market capitalization of approximately $8.05B, a trailing P/E of 13.60, a beta of 0.52 versus the broader market, a 52-week range of 31.63-44.14, average daily share volume of 1.9M, a public-listing history dating back to 2017, approximately 176 full-time employees. These structural characteristics shape how HESM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.52 indicates HESM has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HESM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a bull call spread on HESM?
A bull call spread buys an at-the-money call and sells an out-of-the-money call at a higher strike for defined risk and defined reward bounded by the strike width.
Current HESM snapshot
As of May 15, 2026, spot at $39.83, ATM IV 22.70%, IV rank 46.63%, expected move 6.51%. The bull call spread on HESM 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 bull call spread structure on HESM specifically: HESM IV at 22.70% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 6.51% (roughly $2.59 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 HESM expiries trade a higher absolute premium for lower per-day decay. Position sizing on HESM should anchor to the underlying notional of $39.83 per share and to the trader's directional view on HESM stock.
HESM bull call spread setup
The HESM bull call spread below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With HESM near $39.83, the first option leg uses a $40.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HESM 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 HESM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $40.00 | $1.83 |
| Sell 1 | Call | $42.00 | $0.80 |
HESM bull call spread risk and reward
- Net Premium / Debit
- -$102.50
- Max Profit (per contract)
- $97.50
- Max Loss (per contract)
- -$102.50
- Breakeven(s)
- $41.03
- Risk / Reward Ratio
- 0.951
Max profit equals strike width minus net debit times 100; max loss equals net debit times 100. Breakeven is long-call strike plus net debit.
HESM bull call spread payoff curve
Modeled P&L at expiration across a range of underlying prices for the bull call spread on HESM. 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% | -$102.50 |
| $8.82 | -77.9% | -$102.50 |
| $17.62 | -55.8% | -$102.50 |
| $26.43 | -33.7% | -$102.50 |
| $35.23 | -11.5% | -$102.50 |
| $44.04 | +10.6% | +$97.50 |
| $52.84 | +32.7% | +$97.50 |
| $61.65 | +54.8% | +$97.50 |
| $70.45 | +76.9% | +$97.50 |
| $79.26 | +99.0% | +$97.50 |
When traders use bull call spread on HESM
Bull call spreads on HESM reduce the cost of a bullish HESM stock position by selling a higher-strike call; suited to moderate-move theses where price reaches but does not vastly exceed the short strike.
HESM thesis for this bull call spread
The market-implied 1-standard-deviation range for HESM extends from approximately $37.24 on the downside to $42.42 on the upside. A HESM bull call spread caps both the risk and the reward of a bullish position; relative to an outright long call on HESM, the spread reduces the cost basis but limits the maximum profit to the strike width minus net debit. Current HESM IV rank near 46.63% is mid-range against its 1-year distribution, so the IV signal is neutral; the bull call spread thesis on HESM should anchor more to the directional view and the expected-move geometry. As a Energy name, HESM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HESM-specific events.
HESM bull call spread positions are structurally moderately 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. HESM positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HESM alongside the broader basket even when HESM-specific fundamentals are unchanged. Long-premium structures like a bull call spread on HESM are particularly exposed to IV-crush risk through scheduled events (earnings, FDA decisions, central-bank meetings) where IV typically contracts post-event regardless of the directional outcome. Always rebuild the position from current HESM chain quotes before placing a trade.
Frequently asked questions
- What is a bull call spread on HESM?
- A bull call spread on HESM is the bull call spread strategy applied to HESM (stock). The strategy is structurally moderately bullish: A bull call spread buys an at-the-money call and sells an out-of-the-money call at a higher strike for defined risk and defined reward bounded by the strike width. With HESM stock trading near $39.83, the strikes shown on this page are snapped to the nearest listed HESM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are HESM bull call spread max profit and max loss calculated?
- Max profit equals strike width minus net debit times 100; max loss equals net debit times 100. Breakeven is long-call strike plus net debit. For the HESM bull call spread priced from the end-of-day chain at a 30-day expiry (ATM IV 22.70%), the computed maximum profit is $97.50 per contract and the computed maximum loss is -$102.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HESM bull call spread?
- The breakeven for the HESM bull call spread priced on this page is roughly $41.03 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 HESM market-implied 1-standard-deviation expected move is approximately 6.51%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a bull call spread on HESM?
- Bull call spreads on HESM reduce the cost of a bullish HESM stock position by selling a higher-strike call; suited to moderate-move theses where price reaches but does not vastly exceed the short strike.
- How does current HESM implied volatility affect this bull call spread?
- HESM ATM IV is at 22.70% with IV rank near 46.63%, 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.