Roll Forward and Up 1 Covered Call on LI -20.95% potential income return in 102 days
On April 23, 2021, we roll forwarded 1 covered call on NASDAQ:LI stock expiring on April 30, 2021. For this trade, we got $15 (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 APR 30 '21 22.5 Call Option 0.15 USD
what can happen next:
LI is trading below our strike price of $22/5 at the expiry date (April 30, 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 $22.5, our 100 shares get called away at the strike price of $22/5 and we realize our max gain, -$722.8 or negative -20.95% potential income loss in 102 days
In the case of strike price 22.5 will get challenged next week - we are going to roll up and forward for a credit
Break-even: $29.81