Roll Forward and down 1 Covered Call on Li Auto (NASDAQ:LI) -23.76% potential income return in 53 days
On April 19, 2021, we roll forwarded 1 covered call on NASDAQ:LI stock expiring on April 24, 2021. For this trade, we got $14 (before commissions)
We have been in this trade since March 02
Li Auto Inc., also known as Li Xiang, is a Chinese electric vehicle manufacturer headquartered in Beijing, with manufacturing facilities in Changzhou
As we have been buying LI using dollar-cost averaging our average buy price is: $27.56
here is our trade setup:
SLD 1 LI APR 23 '21 20.5 Call Option 0.14 USD
what can happen next:
LI is trading below our strike price of $20.5 at the expiry date (April 23, 2021), in such case, we keep the premium and sell more covered calls to lower our cost basis.
In case LI is trading above our strike price of $20.5, our 100 shares get called away at the strike price of $20.5 and we realize our max gain (loss), -$655 or -23.76% potential income in 53 days
In case our strike price will get challenged, I will roll up and forward for credit this trade.