Running the wheel on NVDA is one of the cleaner ways to see how this strategy actually works in practice — not in theory, but with real strikes, real premiums, and real decisions you'd face along the way.
Let's walk through a complete cycle using NVDA as it traded around $875 in mid-2024. These numbers are based on actual market conditions from that period, so you can see what realistic premiums look like on a high-IV name like Nvidia.
The Starting Position: Selling a Cash-Secured Put
You start the wheel by selling a cash-secured put (CSP) on a stock you're willing to own. This part matters — you need to actually want to hold NVDA shares if things go sideways. If you're just chasing premium on a stock you'd panic-sell at the first sign of trouble, the wheel will hurt you.
In this scenario, NVDA is trading at $875. You sell the $840 put expiring in 28 days (roughly one monthly cycle) and collect $18.50 per share, or $1,850 per contract. That's about a 2.1% return on the $84,000 in cash you need to secure the trade.
Your breakeven at expiration is $821.50 — that's your strike minus the premium collected. NVDA would need to drop more than 6% before you're technically "underwater" on the position.
Now you wait.
Scenario One: The Put Expires Worthless
NVDA closes at $882 on expiration day. Your $840 put expires worthless, you keep the full $1,850, and you're back to cash. The trade took 28 days and returned about 2.1% on capital at risk.
You immediately look for the next cycle. Same process — find a strike 4-6% out of the money, target 2-4 weeks out, collect somewhere in the $15-25 range depending on where IV sits. Repeat.
This is the "boring" outcome. It's also the ideal one. You're essentially getting paid to wait for a stock you like to come down to a price you'd love to buy it at.
Scenario Two: You Get Assigned
NVDA drops to $820 by expiration. Your $840 put gets exercised. You now own 100 shares of NVDA at an effective cost basis of $821.50 (the strike minus your premium).
This is where a lot of beginners freak out. Don't. This is the plan working exactly as designed.
You now own shares of a company you said you wanted to own, at a price 6% below where it was trading when you entered. Your job now is to sell covered calls.
Transitioning to Covered Calls
With 100 shares of NVDA at a cost basis of $821.50, you sell the $855 covered call expiring in 28 days. Premium comes in at around $16.40, or $1,640 per contract.
Why $855? You want to pick a strike that gives you a reasonable shot at getting called away while still locking in a profit. At $855, if NVDA recovers and closes above that strike, you sell your shares for $855 and pocket the $16.40 in premium on top. Your total return on the position looks like this: you bought at $821.50 effective, sold at $855, plus kept $16.40 in call premium. That's roughly $49.90 per share in total profit, or about 6% on your capital in under two months.
If NVDA stays below $855 at expiration, you keep the $1,640 in premium and sell another covered call the following month. You keep doing this until either the shares get called away or your cost basis drops low enough that you're comfortable holding long-term.
The Part Nobody Talks About
Here's where the wheel gets tricky on a volatile name like NVDA. What if it drops to $750 after you get assigned at $821.50? Now you're sitting on an unrealized loss of about $7,150 on the shares, and the covered calls you can sell at reasonable strikes might only bring in $12-15 per contract.
This is a real scenario. NVDA dropped from around $950 to under $800 multiple times in 2024. Your covered call income helps, but it doesn't fully protect you if the stock craters.
This is why position sizing on the wheel matters more than strike selection. If NVDA represents 20% of your total account and it drops 20%, you're down 4% on your whole portfolio just from one position. Most experienced wheel traders keep any single position under 10% of total capital, sometimes less on high-beta names like NVDA.
What You Can Actually Do Today
If you want to run this trade right now, pull up NVDA's option chain and look at puts expiring 21-35 days out. Find the strike that sits roughly 5% below the current price and check the premium. If you're collecting at least 1.5-2% of the strike price in premium, the trade is worth considering. If IV is compressed and you're only getting 0.8%, pass and wait for a better entry.
The wheel works best when you're patient about entry points. You don't have to sell a put every single month. Sometimes the right move is to sit in cash and wait for IV to spike — which on NVDA happens regularly around earnings — and then sell into elevated premium. That's when this strategy really earns its keep.