"We're just keeping all of the options open right now," Chargers general manager Tom Telesco said Thursday, according to Grant Gordon of NFL.com. "This year, with where the cap is, it makes it more difficult than in other years. But, I think you have to keep all of the doors open at this point."
Henry, 26, played on the franchise tag worth $10.6 million in 2020. The Arkansas product hauled in 60 receptions for 613 yards and four touchdowns as he became a reliable target for quarterback Justin Herbert.
The Chargers have until March 17 to work toward an extension with Henry, or the team could opt to tag him for a second consecutive season by the March 9 deadline. If they don't do either, the tight end can explore the market as an unrestricted free agent.
Injuries hampered Henry in prior seasons. A tibia plateau fracture in his left knee sidelined him for four games in 2019, and he missed the entire 2018 campaign after suffering a torn ACL.
Telesco added that Henry's a shining example of the Chargers' drafting and talent development.
"Well, he falls under the category of things we've done right," Telesco said. "You draft a player, he develops and turns into a really, really high-level tight end for us."