Roll Forward and down 1 Covered Call on LI –13.04% potential income return in 73 days

On March 24, 2021, we roll forwarded 1 covered call on NASDAQ:LI  stock expiring on April 01, 2021. For this trade, we got $39 (before commissions)

This trade comes as #161 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 1.83% from our $2,000 monthly goal. While in total we have reached already 307.76% so far. Awesome.

We have been in this trade since January 22, when we bought 100 shares with LI at $34.50, see: Sold Covered Call on LI – 8.45% potential income return in 10 days

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 01 '21 26 Call Option 0.39 USD

what can happen next:

LI is trading below our strike price of $26 at the expiry date (April 1, 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 $26, our 100 shares get called away at the strike price of $26 and we realize our max gain, -$450.2 or negative -13.04% potential income loss in 73 days

In case of strike price 26 will get challenged next week - we are going to roll up and forward for a credit

Break-even: $30.58

Selling covered calls with LI stock
Selling covered calls with LI stock

  • Running Total  56 Trades since January 19, 2021
  • Options income $1,960