Tranches and break-even

What a tranche is

A tranche is a group of shares, or of short puts, opened at one price. Shares assigned from a put at a $50 strike form one tranche; shares bought later at $45 form another. Most brokers blend those into one average cost. SmartStrikes keeps them apart, so you can see which shares a covered call is written against and where each lot breaks even.

That matters for the wheel. When a stock falls after you're assigned, a lower tranche can carry covered calls at prices that still make money for it, while a higher tranche waits for the stock to recover.

Shares that don't make a whole lot of 100 are gathered into one Pool tranche per stock, labelled with "(Pool)".

What break-even means

A break-even is the share price at which a position stops losing money once everything it has earned or paid is counted:

• With shares held: what the shares cost, less the premium collected and the gains already banked, divided by the shares.
• With only short puts open: the put's strike, less the net premium per share. That's what the shares would effectively cost if the put were assigned.

A worked example

Leaving fees aside:

1. You sell one $50 put for $1.00 a share, collecting $100. While it's open, its break-even is $50 − $1.00 = $49.00.
2. The put is assigned. You now hold 100 shares that cost $5,000, a tranche with a cost of $50. With the $100 premium counted, the break-even is ($5,000 − $100) ÷ 100 = $49.00.
3. You sell a covered call on the tranche for $0.50 a share, another $50. The break-even drops to ($5,000 − $150) ÷ 100 = $48.50.

So this tranche has two prices worth knowing: its cost, $50, and its break-even, $48.50. Every premium it collects pushes the break-even lower.

The Tranches view shows a break-even for every tranche and one for the stock as a whole. The options table, the chart and AI Analysis use the very same numbers, so they always agree.

How rolls carry into a tranche

Rolling a put means buying it back and selling another put on the same stock, usually lower or further out. SmartStrikes treats a roll as one position continuing: the gain or loss on the put you bought back moves into the new put's tranche, and on into the shares if that put is assigned. Roll again and the running total moves again.

For example: you sold a $50 put for $1.00 and bought it back for $3.00, a $200 loss on one contract. At the same time you sold a $47 put for $2.50. The $200 loss travels with the new put, so its net premium is $250 − $200 = $50, and its break-even is $47 − $0.50 = $46.50 rather than $44.50.

A trade counts as a roll when a put is bought back (not one that expired or was assigned) and a different put is sold on the same stock:

• For Tastytrade history, which has exact times, the two trades must be within an hour of each other, in either order.
• For Fidelity exports, which have dates only, they need only be on the same trade date.
• If several puts were bought back or sold that day, the closest matches are paired and the pairing is marked as a best guess.

A roll to the same strike at a later expiration stays in one tranche, so nothing needs to move. Only puts are followed this way; long options outside the wheel, and dividends, aren't counted in break-evens.

The stock's break-even

A tranche's own break-even always counts that tranche's trades since it was last empty, plus any rolls into or out of it. Which trades the stock's break-even counts is your choice, in Settings → General → Tranches → Break-even basis:

• Whole position since last flat (the default): every stock and option trade since you last held nothing in that stock, including trades now closed. A stock you sold out of last year and bought again this year starts fresh.
• Open positions only: only the tranches still open. Rolls still carry, because a roll is one position continuing.

With the whole-position setting, a stock's break-even can differ from what its tranches suggest on their own.

The Tranches view

The Tranches view in the Analysis tab, titled Tranche Analysis, shows your wheel positions stock by stock, account by account. Under each stock you'll see:

• A stock row with the ticker in bold, the live price and change, and the wheel grade. Its numbers are totals for the whole stock.
• Tranche rows, named by the tranche's price, such as "Tranche 48.50 · +3.2%". The muted percentage is how far the current price is from the tranche's cost.
• Share and option rows under each tranche, with labels for the shares and for each open option.

The columns you'll use most:

• Avail CC: shares still free for covered calls, in whole lots of 100 with no call written against them.
• Trd Prc: what the shares or options were opened at; on a tranche row, its cost per share.
• Real Prem: net realized premium, credits less debits and fees.
• Break-Even: the price at which the row stops losing money.
• Capital %: how much of the account's value is in the row, turning amber or red above the levels you set in Settings → Analysis.

Tap any Break-Even, on a stock or tranche row, to open its breakdown: every share trade, option trade, roll and fee behind it, with subtotals that add up to the number in the table. A rolled put's whole history can be traced there, back to the first sale.

The Avail CC button in the toolbar filters the table to stocks with covered calls available; each tap moves on: only the tranches with shares free, then every tranche of those stocks, then back to everything. Symbol filters to one stock, and Refresh fetches new trades.

The coloured Break-Even value

On each tranche row, the Break-Even value is tinted and marked with an arrow to show where today's price sits:

• ▲ green: the price is at or above the tranche's cost, deeper green at 5% and 10% above it.
• ▲ amber: the price is above the break-even but below the cost.
• ▼ red: the price is below the break-even, deeper red at 5% and 10% below it.

In the example above (cost $50, break-even $48.50), a price of $49 would show amber. Hover over the value, or long-press it on a phone, for the exact distances. Only the value is coloured, never the row, and the price stays live. Turn the colouring off with Settings → General → Tranches → Show price vs. break-even.

The C, the ✓ ↻ ! marks and the ↓

A few small marks in the Tranches view check live option quotes against the tranche-based wheel's rules. They show paths the strategy weighs, not recommendations; what you trade is up to you. They're checked when the view opens, every 5 minutes while it's open, and when you tap Refresh, reading only the few quotes they need. Hover over (or long-press) any of them for the figures behind it.

The coloured C beside Avail CC

On a tranche with shares free for covered calls, a small C beside the Avail CC number says whether a covered call would pay your Min call CAGR % (Settings → General → Options tab), looking at the expiration closest to 14 days out. The strategy sells calls only at or above a tranche's break-even:

• Green C: a call at or above the tranche's cost pays your target.
• Amber C: only calls between its break-even and its cost pay it. Assignment would still be a gain on the tranche, though below what the shares cost.
• Red C: no call at or above its break-even pays your target.

A call with no bid doesn't count, and a tranche whose quotes couldn't be loaded shows no C.

✓ ↻ ! on option rows

Beside an open put or call, small icons show the moves the strategy weighs for it. Several can show at once, and an option with nothing to show has none:

• ✓ Close: the option is out of the money and 80% or more of its premium is already kept.
• ↻ Roll: the option is in the money, or within 5% of its strike and now costing more than it was sold for, and a roll to a later expiration comes out at a credit or even. Puts roll to the same or a lower strike, calls to the same or a higher one. A roll that would cost money is never shown.
• ! Assignment: the option is in the money. For a put, assignment would add shares at the strike, a new tranche; for a call, the shares would leave at the strike.

↓ the next rung

When every tranche of a stock is below its break-even, a ↓ appears beside the stock's price on its row. Rather than waiting on underwater tranches, the strategy starts the next rung lower: a new put below the stock price that would open a new, lower tranche if assigned.

• Green ↓: a put at or below the stock price pays your Min put CAGR % (Settings → General → Options tab) in the expiration closest to 14 days out.
• Red ↓: none does.

It doesn't show while any tranche is at or above its break-even, or while an open put below the stock price is already building the next rung.

Tranches elsewhere in the app

Your tranches aren't only in the Tranches view. The options table draws a narrow coloured lane for each tranche beside the strikes, from its break-even down to its cost, so you can see which call strikes sit above a tranche's break-even. The chart draws the same tranches as break-even bars beside its price axis. Both use the same break-evens as the Tranches view, and imported accounts are included, with a colour per account.

To have an AI model write up one stock's tranches and paths, see AI Analysis.