1 week ago
SEBI Finds 88% of Individual Derivatives Traders Lost Money
SEBI studied how individual traders performed in derivatives during FY26.
It found that about 88 out of every 100 traders lost money.
Options caused most of the losses, and they were riskier for individuals than futures.
Fewer people traded than in the previous year, so total losses fell.
However, the average loss for each trader increased.
Many traders focused on contracts that expired very soon, especially on the expiry day.
Younger people, lower-income traders and people with small portfolios lost money more often.
Trading costs such as brokerage, taxes and exchange charges also reduced returns.
SEBI introduced rules to reduce risky trading, but it said the study cannot prove that the rules caused the changes.
SEBI reported that 88% of individual derivatives traders lost money in FY26, with aggregate losses of ₹91,685 crore.
Active individual traders fell 18% year-on-year to 87.5 lakh, while average loss per trader rose 2.4% to about ₹1.17 lakh.
Options generated 92% of aggregate losses, with 87.7% of options traders losing money compared with 66% of futures traders.
Short-duration trading remained dominant: 59% of index-options turnover occurred on expiry day and 97% within one week of expiry.
Losses were concentrated among smaller-portfolio, younger and lower-income traders, while SEBI said its data did not establish that regulations caused the market changes.
- Who
- The Securities and Exchange Board of India and individual derivatives traders, especially options traders, younger traders, lower-income traders and those with smaller equity portfolios.
- What
- SEBI found that 88% of individual derivatives traders lost money in FY26, with ₹91,685 crore in aggregate losses and options responsible for 92% of those losses.
- Where
- The derivatives market, including index options and index futures.
- When
- FY26, with comparisons primarily made against FY25 and the FY22-FY26 period.
- Why
- The study linked losses to short-duration options trading, leverage, trading frequency, transaction costs and concentrated activity among traders with smaller portfolios; SEBI had introduced measures to curb excessive speculation.
Evidence of Reduced Risky Activity
Limits of the Regulatory Impact
Participation and losses
Evidence of Reduced Risky Activity
The decline in participation and aggregate losses after SEBI introduced new measures suggests that some retail derivatives activity and speculation were reduced.
Limits of the Regulatory Impact
The decline in total losses partly reflected fewer traders and lower activity, while the average loss per trader increased; SEBI said the study does not establish causation.
Expiry-day trading
Evidence of Reduced Risky Activity
The share of index-options turnover occurring on expiry day fell from 70% in FY25 to 59% in FY26, indicating less concentration in the shortest-duration activity.
Limits of the Regulatory Impact
Trading remained heavily concentrated near expiry, with 75% of turnover occurring within one day and 97% within one week of expiry.
Market adaptation
Evidence of Reduced Risky Activity
Restrictions on weekly contracts, larger minimum contract sizes and other risk controls were followed by reduced participation, particularly in index options.
Limits of the Regulatory Impact
The market adapted: average turnover per remaining index-options trader increased 12%, index-futures turnover per trader rose 20%, and index-options premium turnover later recovered strongly.
Key facts
- Active traders
- The number of active individual traders fell 18% year-on-year to 87.5 lakh in FY26.
- Aggregate losses
- Individual traders lost ₹91,685 crore in FY26, compared with ₹1,11,788 crore in FY25.
- Average loss
- Average loss per trader rose from about ₹1.14 lakh to ₹1.17 lakh, an increase of 2.4%.
- Options losses
- Options accounted for 92% of aggregate individual losses, and 87.7% of options traders lost money.
- Index options
- Index-options losses declined from ₹88,529 crore to ₹71,269 crore, while the trader base fell 21% to 74.8 lakh.
- Transaction costs
- Individual traders incurred roughly ₹24,800 crore in transaction costs in both FY25 and FY26; the average cost per trader rose to ₹31,628 in FY26.
- Cumulative losses
- Individual traders accumulated around ₹3.85 lakh crore in net losses during FY22-FY26.
Sources
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