New Covered Call on Tilray stock (NASDAQ:TLRY) - Potential income return -4.65% in 7 days

On May 21, 2021, we sold 1 covered call on TLRY stock expiring on May 28, 2021 (7DTE). For this trade, we got a, $41 premium (before commissions)

I sold this covered call just shortly after getting assigned 100 shares at $20. Originally we entered this trade as a bull put credit spread with strike prices $20/$18

As TLRY stock price fell under $16, we decided to take assignment + sell protective put to offset losses and try to recover from this losing trade with covered calls

Our average buy price $17.18

Tlry stock has been very volatile and speculative (premiums are great) during the last 6 months.

here is our trade setup:

  • SLD 1 TLRY May 28 '21 16 Call Option 0.41 USD

what can happen next:

TLRY is trading below our strike price of $16 at the expiry date (May 28, 2021), in this case, we keep the premium and sell more covered calls to lower our cost basis. 

In case the TLRY stock is trading above our strike price of $16, our 100 shares get called away at the strike price of $16, and we realize our max gain negative -$80 or -4.65% potential return of income in 7 days

In case our strike price o f$16 will get challenged this week, we will try to roll up and forward for additional credit

Break-even: $16.8