NIFTY futures wheel
The wheel is a two-state income cycle borrowed from stock option traders. While flat, it sells a monthly NIFTY put worth about 1% of the index. If the put expires in the money, it treats that as being assigned and goes long NIFTY futures, then sells monthly calls against the position until one expires in the money and the long is called away. The cycle then starts again with puts.How it trades
Results
PRE-BUILT · DEFAULTSWhere it made and lost money
With 13 monthly steps the sample is small, but the split is stark. Months when NIFTY rose more than 1% made ₹1,26,199 over 4 steps and flat months made ₹67,720 over 6, every one a winner, because the sold option expired worthless and any long future drifted up. The 3 months when NIFTY fell more than 1% lost ₹3,52,563, as an assigned put turned into a long future that kept falling with only about 1% of premium to cushion it. Steps that began with NIFTY below its 20-day average lost ₹2,13,640 over 9.
About this strategy
- Flat state: at 09:20 on the first day of a monthly series, sell one lot of the monthly OTM put whose price is closest to 1% of the index.
- Hold the put to the close of expiry day; there is no stop.
- If NIFTY futures finish below the put strike, the put is treated as assigned and the state switches to long.
- Long state: at the start of each series, buy one lot of the near-month NIFTY future and sell the monthly OTM call priced closest to 1% of the index.
- Close the future at every monthly expiry and buy it again next session while still long (the roll).
- If the call finishes in the money, the long is treated as called away and the state returns to flat.
Why traders use it
The wheel turns a willingness to own the index into monthly income. Selling puts gets paid for agreeing to buy lower; once long, selling calls gets paid for agreeing to sell higher. Each step collects premium, and the rules are simple enough to run once a month. It became popular with US stock option traders, and Indian traders adapt it to NIFTY using futures in place of buying the index outright.
The year in plain words
On NIFTY from 1 Oct 2025 to 30 Sep 2026 the wheel completed 13 monthly steps: 7 put sales and 6 long-futures-plus-call months. Ten steps made money, a 77% win rate, mostly between ₹2,000 and ₹18,000. But the three losers averaged ₹1,17,521, led by March 2026 at ₹2,03,183, when an assigned long fell sharply, and September at ₹1,00,198. Net P&L was a ₹1,58,644 loss before costs and ₹1,61,128 after costs. The small monthly premiums could not offset the full futures downside in the falling months.
What the settings do
Risks
- In the long state the strategy carries the full downside of a NIFTY futures lot with only a small premium cushion.
- There is no stop, so losing months are held to expiry.
- A high win rate hides rare but very large losses, as March 2026 showed.
- Short options and futures need significant margin, and the long future is exposed to overnight gaps.
Who it suits
Traders who are content to own NIFTY over the long run, want a once-a-month routine, and have margin for a futures lot plus a short option. It suits those who accept full market downside in exchange for steady premium income.
Questions traders ask
What is the wheel strategy?
It alternates between selling puts and selling covered calls. While holding nothing, you sell puts; if one is exercised, you hold the underlying and sell calls against it until the position is called away, then go back to selling puts. Each step collects option premium.
How does the wheel work on NIFTY without buying an ETF?
Index options are cash settled, so there is no real assignment. This version treats a put that expires in the money as assignment and replaces holding the index with a long near-month NIFTY future, rolled each month, while calls are sold against it.
Is the NIFTY wheel strategy profitable?
In this backtest from 1 Oct 2025 to 30 Sep 2026 it lost ₹1,58,644 before costs and ₹1,61,128 after ₹20 per order and slippage, despite winning 10 of 13 monthly steps, because the losing months were very large. Past results do not guarantee future ones.
How is the wheel different from a covered call?
A covered call is always long and always selling calls. The wheel starts flat and only goes long after a put is assigned, so it spends some months holding just a short put and some months holding futures with a short call.