Fewer F&O Traders, Same Old Problem?

General
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SEBI’s FY25–FY26 F&O study is worth looking at beyond just the headline number of ₹91,685 crore in losses.

For reference, you can read the SEBI’s full research report here.

Individual traders in equity derivatives fell 18% to 87.5 lakh in FY26. New entries also dropped sharply; only 20.8 lakh new traders entered the segment, compared with 34.3 lakh a year earlier. At the same time, nearly 46 lakh traders who traded in FY25 didn’t trade in FY26.

So yeaah, there is clearly some cooling off in participation, especially with stricter norms and higher costs.

But the interesting part is what happened to the traders who stayed.

87.7% still made a net loss, and the average loss actually increased from around Rs1.13 lakh to Rs1.17 lakh. The average loss-maker lost Rs1.47 lakh, while the average profitable trader made Rs1.22 lakh.

And options continue to dominate the whole story. 93% of individual traders traded only options, while options accounted for 92% of aggregate individual losses.

One more number that surprised me: just 23% of traders accounted for almost 90% of the total losses !!

The numbers are definitely changing, but I’m not sure we can say the F&O problem is changing just yet. At the end of the day, it’s hard to control human greed, especially in a market this liquid.

Would be interesting to see what changes over the next year.

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The loss rate was also significantly higher in options, where 87.7 percent of traders lost money, compared with 66 percent in futures.

Put another way:

  • 1 in 10 chance of being profitable trading options. :dizzy_face:
  • 1 in 3 chance of being profitable trading futures. :dizzy:

97 per cent of traders following option-buying strategies, while only around 2 per cent were primarily options sellers.
Higher trading intensity was strongly associated with higher loss rates
Greater experience did not translate into better outcomes, with loss rates remaining high even among seasoned traders.

To stack the odds in your favor:

  • Sell options primarily with vol based position sizing :chart_with_upwards_trend:
  • Express directional view using futures :chart_with_downwards_trend:
  • Positional and longer timeframes greatly reduce risk :hourglass_flowing_sand:
  • Read, learn, and continue to improve your trade. Experience alone does not guarantee success in the long term if you do not consciously make the effort to improve. :books: