Roll Forward and down 1 covered Call on LI -28.59% potential income return in 123 days

On May 11, 2021, we rolled forward and down 1 covered call on NASDAQ:LI  stock expiring on May 21, 2021. For this trade, we got a $17 (before commissions)

We have been in this trade since January 22, when we bought 100 shares with LI at $34.50

Li Auto Inc., also known as Li Xiang, is a Chinese electric vehicle manufacturer headquartered in Beijing, with manufacturing facilities in Changzhou.

here is our trade setup:

  • SLD 1 LI MAY 21 '21 19.5 Call Option 0.17 USD

what can happen next:

LI is trading below our strike price of $19.5 at the expiry date (May 21, 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 $18.5, our 100 shares get called away at the strike price of $19.5 and we realize our max gain, -$086.6 or negative -28.59% potential income loss in 123 days

In the case of strike price $19.5 will get challenged - we are going to roll up and forward for a credit

Break-even: $29.46