HESM Cash-Secured Put 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 cash-secured put on HESM?
A cash-secured put sells an out-of-the-money put while holding cash equal to the strike-times-100 obligation, keeping the premium when the underlying stays above the strike.
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 cash-secured put 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 cash-secured put structure on HESM specifically: HESM IV at 22.70% is mid-range versus its 1-year history, so the credit collected on a HESM cash-secured put sits in line with its long-run distribution, 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 cash-secured put setup
The HESM cash-secured put 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 $38.00 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) |
|---|---|---|---|
| Sell 1 | Put | $38.00 | $1.23 |
HESM cash-secured put risk and reward
- Net Premium / Debit
- +$122.50
- Max Profit (per contract)
- $122.50
- Max Loss (per contract)
- -$3,676.50
- Breakeven(s)
- $36.78
- Risk / Reward Ratio
- 0.033
Max profit equals premium times 100; max loss equals strike minus premium times 100 (at zero, assuming assignment). Breakeven is strike minus premium.
HESM cash-secured put payoff curve
Modeled P&L at expiration across a range of underlying prices for the cash-secured put 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% | -$3,676.50 |
| $8.82 | -77.9% | -$2,795.95 |
| $17.62 | -55.8% | -$1,915.39 |
| $26.43 | -33.7% | -$1,034.84 |
| $35.23 | -11.5% | -$154.29 |
| $44.04 | +10.6% | +$122.50 |
| $52.84 | +32.7% | +$122.50 |
| $61.65 | +54.8% | +$122.50 |
| $70.45 | +76.9% | +$122.50 |
| $79.26 | +99.0% | +$122.50 |
When traders use cash-secured put on HESM
Cash-secured puts on HESM earn premium while a trader waits to acquire HESM stock at a target strike below the current quote; most attractive when IV is rich and the trader is comfortable owning HESM.
HESM thesis for this cash-secured put
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 cash-secured put lets a trader earn premium while waiting to acquire HESM at the strike price; the strategy is most attractive when the trader is comfortable holding the underlying at that level and IV is rich enough to compensate for the assignment risk. Current HESM IV rank near 46.63% is mid-range against its 1-year distribution, so the IV signal is neutral; the cash-secured put 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 cash-secured put 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. 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. Short-premium structures like a cash-secured put on HESM carry tail risk when realized volatility exceeds the implied move; review historical HESM earnings reactions and macro stress periods before sizing. Always rebuild the position from current HESM chain quotes before placing a trade.
Frequently asked questions
- What is a cash-secured put on HESM?
- A cash-secured put on HESM is the cash-secured put strategy applied to HESM (stock). The strategy is structurally neutral to slightly bullish: A cash-secured put sells an out-of-the-money put while holding cash equal to the strike-times-100 obligation, keeping the premium when the underlying stays above the strike. 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 cash-secured put max profit and max loss calculated?
- Max profit equals premium times 100; max loss equals strike minus premium times 100 (at zero, assuming assignment). Breakeven is strike minus premium. For the HESM cash-secured put priced from the end-of-day chain at a 30-day expiry (ATM IV 22.70%), the computed maximum profit is $122.50 per contract and the computed maximum loss is -$3,676.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HESM cash-secured put?
- The breakeven for the HESM cash-secured put priced on this page is roughly $36.78 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 cash-secured put on HESM?
- Cash-secured puts on HESM earn premium while a trader waits to acquire HESM stock at a target strike below the current quote; most attractive when IV is rich and the trader is comfortable owning HESM.
- How does current HESM implied volatility affect this cash-secured put?
- 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.