1 week ago
SEBI Study Finds F&O Trading Losses Persist Despite Experience
A study found that most people who trade futures and options lose money.
Staying in the market longer did not guarantee better results.
Many traders buy options because they seem like inexpensive chances to win a lot.
However, about 90% of option buyers lost money.
Traders often held on after losing because they hoped to win the money back.
Their typical loss was more than twice their typical profit.
Experts suggest showing traders their full results and limiting how much beginners can trade.
They also recommend putting F&O money into a small, fixed high-risk part of a person’s finances.
SEBI found that 91% of F&O traders lost money after one year, rising to 96.5% after four years.
Only 0.5% of traders active for five years made profits every year, suggesting experience did not reliably build skill.
About 93% bought options rather than selling them, and around 90% of options buyers lost money.
Only 15.4% of trader-quarters were profitable; the median loss was ₹10,525 versus a median profit of ₹4,366.
Suggested safeguards include personalized trading records, lower limits for beginners, voluntary loss limits, cooling-off periods, and clearer risk displays.
- Who
- Futures and options traders, with recommendations from Rachana Baid of the National Institute of Securities Markets.
- What
- A Securities and Exchange Board of India study found that most F&O traders lose money and outlined measures to make trading safer.
- Where
- The study concerns India’s securities market.
- When
- The study’s figures cover FY26 and trading periods of one, four, and five years; no publication date is specified.
- Why
- Many traders buy options because of their lottery-like appeal, take excessive risks, and continue trading after losses; proposed safeguards aim to limit these risks.
Key facts
- One-year loss rate
- 91% of F&O traders lost money after one year.
- Four-year loss rate
- 96.5% of traders lost money after four years.
- Five-year consistent profitability
- Only 0.5% of five-year traders made profits every year.
- Options buying
- About 93% of traders bought options without selling them.
- Options buyers’ losses
- Around 90% of options buyers lost money; the article reports their median return on capital as “=114%” in FY26.
- Profit versus loss
- Only 15.4% of trader-quarters were profitable; the median profit was ₹4,366 and the median loss was ₹10,525.
- Suggested safeguards
- Recommendations include full trading records at login, lower limits for beginners, selected annual loss limits, cooling-off periods, and clearer order-screen risk information.
Sources
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