HII Covered Call Strategy
HII (Huntington Ingalls Industries, Inc.), in the Industrials sector, (Aerospace & Defense industry), listed on NYSE.
Huntington Ingalls Industries, Inc. (HII) stands as a prominent American enterprise specializing in the comprehensive lifecycle management of military vessels, encompassing their design, construction, modernization, and maintenance. The company's diverse operations are segmented into three core divisions: Ingalls Shipbuilding, Newport News Shipbuilding, and Technical Solutions. HII is a primary builder of non-nuclear ships, delivering amphibious assault ships, expeditionary warfare vessels, surface combatants, and national security cutters to both the U.S. Navy and U.S. Coast Guard. Furthermore, it plays a critical role in providing nuclear-powered ships, including aircraft carriers and submarines, along with essential associated services such as refueling, extensive overhauls, and inactivation procedures.
HII (Huntington Ingalls Industries, Inc.) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $12.88B, a trailing P/E of 19.53, a beta of 0.24 versus the broader market, a 52-week range of 262.66-460, average daily share volume of 522K, a public-listing history dating back to 2011, approximately 45K full-time employees. These structural characteristics shape how HII stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.24 indicates HII has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HII pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on HII?
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.
HII snapshot
As of August 14, 2026, spot at $328.06, ATM IV 28.40%, IV rank 13.92%, expected move 8.14%. The covered call on HII 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 HII specifically: HII IV at 28.40% is on the cheap side of its 1-year range, which means a premium-selling HII covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 8.14% (roughly $26.71 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 HII expiries trade a higher absolute premium for lower per-day decay. Position sizing on HII should anchor to the underlying notional of $328.06 per share and to the trader's directional view on HII stock.
HII covered call setup
The HII 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 HII at $328.06 on that close, the first option leg uses a $340.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HII 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 HII shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $328.06 | long |
| Sell 1 | Call | $340.00 | $6.15 |
HII covered call risk and reward
- Net Premium / Debit
- -$32,191.00
- Max Profit (per contract)
- $1,809.00
- Max Loss (per contract)
- -$32,190.00
- Breakeven(s)
- $321.91
- Risk / Reward Ratio
- 0.056
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.
HII covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on HII. 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% | -$32,190.00 |
| $72.54 | -77.9% | -$24,936.52 |
| $145.08 | -55.8% | -$17,683.05 |
| $217.61 | -33.7% | -$10,429.57 |
| $290.15 | -11.6% | -$3,176.09 |
| $362.68 | +10.6% | +$1,809.00 |
| $435.22 | +32.7% | +$1,809.00 |
| $507.75 | +54.8% | +$1,809.00 |
| $580.29 | +76.9% | +$1,809.00 |
| $652.82 | +99.0% | +$1,809.00 |
When traders use covered call on HII
Covered calls on HII are an income strategy run on existing HII stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
HII thesis for this covered call
The market-implied 1-standard-deviation range for HII extends from approximately $301.35 on the downside to $354.77 on the upside. A HII covered call collects premium on an existing long HII position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether HII will breach that level within the expiration window. Current HII IV rank near 13.92% 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 HII at 28.40%. As a Industrials name, HII options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HII-specific events.
HII 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. HII positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HII alongside the broader basket even when HII-specific fundamentals are unchanged. Short-premium structures like a covered call on HII carry tail risk when realized volatility exceeds the implied move; review historical HII earnings reactions and macro stress periods before sizing. Always rebuild the position from current HII chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on HII?
- A covered call on HII is the covered call strategy applied to HII (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 HII stock at $328.06 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed HII chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are HII 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 HII covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 28.40%), the computed maximum profit is $1,809.00 per contract and the computed maximum loss is -$32,190.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HII covered call?
- The breakeven for the HII covered call priced on this page is roughly $321.91 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 HII market-implied 1-standard-deviation expected move in the same options snapshot is approximately 8.14%; 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 HII?
- Covered calls on HII are an income strategy run on existing HII 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 HII implied volatility affect this covered call?
- HII ATM IV is at 28.40% with IV rank near 13.92%, 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.