HLI Covered Call Strategy
HLI (Houlihan Lokey, Inc.), in the Financial Services sector, (Investment - Banking & Investment Services industry), listed on NYSE.
Houlihan Lokey, Inc. is a prominent global investment banking firm offering a comprehensive suite of financial advisory services. These include expertise in mergers and acquisitions (M&A), capital markets, financial restructuring, and valuation. The company's operations are divided into three core segments: The Corporate Finance division provides broad financial guidance. It assists both public and private entities with strategic buy-side and sell-side transactions and a variety of capital-raising activities, such as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings (IPOs), follow-on offerings, convertibles, equity private placements, and private equity investments. This segment also advises financial sponsors on diverse deal structures and liability management initiatives. The Financial Restructuring segment guides debtors, creditors, and other involved parties through complex recapitalization and deleveraging processes.
HLI (Houlihan Lokey, Inc.) trades in the Financial Services sector, specifically Investment - Banking & Investment Services, with a market capitalization of approximately $8.99B, a trailing P/E of 21.07, a beta of 0.96 versus the broader market, a 52-week range of 112.83-211.777, average daily share volume of 801K, a public-listing history dating back to 2015, approximately 3K full-time employees. These structural characteristics shape how HLI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.96 places HLI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. HLI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on HLI?
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.
HLI snapshot
As of August 14, 2026, spot at $128.75, ATM IV 34.50%, IV rank 3.29%, expected move 9.89%. The covered call on HLI 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 HLI specifically: HLI IV at 34.50% is on the cheap side of its 1-year range, which means a premium-selling HLI covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 9.89% (roughly $12.73 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 HLI expiries trade a higher absolute premium for lower per-day decay. Position sizing on HLI should anchor to the underlying notional of $128.75 per share and to the trader's directional view on HLI stock.
HLI covered call setup
The HLI 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 HLI at $128.75 on that close, the first option leg uses a $135.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HLI 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 HLI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $128.75 | long |
| Sell 1 | Call | $135.00 | $3.35 |
HLI covered call risk and reward
- Net Premium / Debit
- -$12,540.00
- Max Profit (per contract)
- $960.00
- Max Loss (per contract)
- -$12,539.00
- Breakeven(s)
- $125.40
- Risk / Reward Ratio
- 0.077
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.
HLI covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on HLI. 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% | -$12,539.00 |
| $28.48 | -77.9% | -$9,692.38 |
| $56.94 | -55.8% | -$6,845.75 |
| $85.41 | -33.7% | -$3,999.13 |
| $113.87 | -11.6% | -$1,152.51 |
| $142.34 | +10.6% | +$960.00 |
| $170.81 | +32.7% | +$960.00 |
| $199.27 | +54.8% | +$960.00 |
| $227.74 | +76.9% | +$960.00 |
| $256.21 | +99.0% | +$960.00 |
When traders use covered call on HLI
Covered calls on HLI are an income strategy run on existing HLI stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
HLI thesis for this covered call
The market-implied 1-standard-deviation range for HLI extends from approximately $116.02 on the downside to $141.48 on the upside. A HLI covered call collects premium on an existing long HLI position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether HLI will breach that level within the expiration window. Current HLI IV rank near 3.29% 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 HLI at 34.50%. As a Financial Services name, HLI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HLI-specific events.
HLI 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. HLI positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HLI alongside the broader basket even when HLI-specific fundamentals are unchanged. Short-premium structures like a covered call on HLI carry tail risk when realized volatility exceeds the implied move; review historical HLI earnings reactions and macro stress periods before sizing. Always rebuild the position from current HLI chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on HLI?
- A covered call on HLI is the covered call strategy applied to HLI (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 HLI stock at $128.75 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed HLI chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are HLI 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 HLI covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 34.50%), the computed maximum profit is $960.00 per contract and the computed maximum loss is -$12,539.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HLI covered call?
- The breakeven for the HLI covered call priced on this page is roughly $125.40 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 HLI market-implied 1-standard-deviation expected move in the same options snapshot is approximately 9.89%; 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 HLI?
- Covered calls on HLI are an income strategy run on existing HLI 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 HLI implied volatility affect this covered call?
- HLI ATM IV is at 34.50% with IV rank near 3.29%, 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.