The 21-year-old made 18 appearances for the Sky Bet League One Wolves last season, before moving to Tranmere for a third loan spell with the Wirral side.
Wolves manager Kenny Jackett told the club's website his reasons for keeping Cassidy, after deliberations over whether his future lay with the club.
Jackett said: "Cassidy is somebody that League One clubs will take and we can get a good loan so we feel in terms of making that decision it is quite an easy one to keep him.
"And also the centre-forward position - it is difficult during the course of the season sometimes to get forwards in.
"You can end up paying over the odds to cover yourself - particularly if you've got a chance of doing something that particular year. Calling back a younger player from a loan is a good option."
Cassidy has made 25 appearances in total for Wolves since coming through their academy in 2011.
Jackett added: "I certainly think he will do a pre-season (here) and then we will consider it.
"We have had enough enquiries, so we will be able to loan him out - it's part of the factor of keeping players.
"It is something you can do and defer the decision (over their future) while they gain experience."