Sebi study finds most Indian retail F&O traders lose money in FY26

Young investors are increasingly participating in India’s futures and options (F&O) market, but a large majority continue to lose money, according to a Sebi study. Traders below 30 accounted for 43% of individual traders in FY26, up from 31% in FY22.According to a report by Mint citing Sebi data, around 89% of traders under 30 reported losses in FY26, the highest among all age groups. By comparison, 81% of traders above 60 lost money.The study also highlighted the significant participation of lower-income investors. Nearly three-fourths of individual derivatives traders reported annual incomes below ₹5 lakh. This group accounted for 43% of turnover but 53% of total losses.Indian Retail Traders Lose ₹91,685 Crore In F&O Trading In FY26 Despite SEBI Curbs On Derivatives Individual traders' aggregate net losses declined 18% year-on-year to ₹91,685 crore in FY26 from ₹1.12 lakh crore in FY25. However, their cumulative losses over the five years through FY26 reached nearly ₹3.85 lakh crore. The average loss per trader also increased to about ₹1.17 lakh from ₹1.14 lakh.Options remain the biggest source of retail lossesEquity options accounted for 92% of individual traders' aggregate losses in FY26. Nearly 88% of individual options traders lost money, compared with around 66% among futures traders.Retail participation has also spread beyond India's largest cities, with investors outside the top 30 cities accounting for roughly two-thirds of individual traders and nearly half of derivatives turnover. The study found that retail investors continue to favour extremely short-duration options. Although Sebi's measures reduced expiry-day trading, 59% of index-options turnover in FY26 still occurred on the expiry day, while 75% was concentrated within one day of expiry. Only 3% of turnover involved contracts with more than seven days remaining, underscoring the high-risk nature of short-term options trading.

Mumbai: Nearly nine out of 10 individual traders in India's equity derivatives market lost money in FY26, even as regulatory curbs and higher transaction costs triggered the first annual decline in retail participation in a decade, according to a Securities and Exchange Board of India (SEBI) study.The study found that 88% of individual traders incurred losses in FY26, with total net losses amounting to ₹91,685 crore.Individual participation in the equity derivatives segment fell 18% to 88 lakh traders in FY26 from one crore in FY25-the first year-on-year decline in the trader base since FY16. New entrants fell about 40% to 21 lakh, while exits surged, with nearly 46 lakh traders who participated in FY25 staying away from the market in FY26.The decline followed a series of measures introduced by Sebi from November 2024 to curb excessive speculation in short-dated index options. The regulator restricted weekly expiries to one index per exchange, raised minimum contract sizes, tightened margin requirements and mandated upfront collection of options premium. The government also raised the securities transaction tax on equity derivatives.Sebi said participation fell more sharply in options than futures after the measures, though it cautioned that the study does not establish a direct causal relationship.The regulator said trading remained highly concentrated in contracts close to expiry. About 59% of index options turnover occurred in contracts expiring on the same day (0DTE), around 75% within one day of expiry and 97% within one week of expiry.Read more: F&O trading bill: Retail traders pay Rs 25,000 crore transaction costs in FY26 despite big lossesThe study also pointed to disproportionate risks for smaller investors. About 35% of derivatives traders had no underlying equity portfolio, while 78% had portfolios worth less than ₹1 lakh. These small-portfolio traders accounted for 70% of total losses during FY25-FY26.Traders below the age of 30 accounted for 43% of individual derivatives traders, with 89% of them incurring losses. Those earning below ₹5 lakh annually accounted for 53% of aggregate losses despite generating 43% of turnover.