Roll Forward and down 1 Covered Call on LI auto stock -38% potential income return in 74 days
On May 6, 2021, we rolled forward and down 1 covered call on NASDAQ:LI stock expiring on May 14, 2021. For this trade, we got $30 (before commissions)
Li Auto Inc., also known as Li Xiang, is a Chinese electric vehicle manufacturer headquartered in Beijing, with manufacturing facilities in Changzhou
We have been in this trade since March 02
We are struggling with this stock, and are rolling weekly (then up/then down)
As we have been buying LI using dollar-cost averaging our average buy price is: $25.72
here is our trade setup:
SLD 1 LI MAY 04 '21 19 Call Option 0.3 USD
what can happen next:
LI is trading below our strike price of $19 at the expiry date (May 14, 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 $19, our 100 shares get called away at the strike price of $19 and we realize our max gain (loss), -$937.4 or -38.44% potential income loss in 74 days
In case our strike price will get challenged, I will roll up and forward for credit.
Break-even: $25.45