The practice isn’t necessarily making you perfect, if you are a derivatives trader. If you have been trading index options for four years on the belief that you are getting better at it, the Securities and Exchange Board of India (Sebi) has some shocking data for you. Among individual traders who had been in the equity derivatives segment for four consecutive years, 96.5% ended up with a net loss. Among those with a single year behind them, the figure was 91%.
A study by Sebi — Trading Behaviour of Individual Traders in the Equity Derivatives Segment – yet again unravels some uncomfortable truth about derivatives trading. The study, which covers FY25 and FY26 and is the fourth in the regulator’s running series on retail outcomes in futures and options, shows individual traders lost Rs 91,685 crore on a net basis in FY26, down from about Rs 1.12 lakh crore the year before — but the improvement is arithmetic rather than skill.
The number of active individual traders fell about 20% to 78.6 lakh and new entrants dropped by roughly 40%, so a smaller loss was shared among fewer people. Only 57% of traders active in FY25 traded again in FY26, against a long-run cohort average of 65%.
The average loss per trader actually rose slightly, to about Rs 1.17 lakh. Around 92% of the aggregate loss came from options. And Rs 25,000 crore of what individuals paid out in FY26 was not market losses at all but transaction costs — brokerage, exchange charges and securities transaction tax — which stayed broadly flat even as premium turnover moderated, because STT rates rose from October 1, 2024. Across FY22–FY26, individuals have handed over roughly Rs 1 lakh crore in such costs.
On the other side of those trades, proprietary desks booked about Rs 44,000 crore in gross trading profit and foreign portfolio investors Rs 14,000 crore, with 99% of both accruing to algorithmic entities. As many as 87.7% of individual traders lost money in FY26.
Buying call
93% of traders in Sebi’s sample bought options and never sold them first on any trading day. Another 4% sold options on fewer than half their trading days. Together, 97% of individual participants were essentially options buyers. Barely 2% were predominantly options sellers, and under 1% traded futures mainly.
Options buyers lost most often. 90% of the “only options buyers” category made a loss in FY26, against 44% of the predominantly options-selling group — the lowest loss rate of the four categories, and down from 51% in FY25.
Sellers didn’t have it a field day either. Sellers as a category still lost Rs 543 crore on a net basis in FY26, worse than the Rs 428 crore of FY25, because the losses that did land were enormous. Sebi puts the average loss for that category at about Rs 51.7 lakh — more than eleven times the figure for majorly options buyers at Rs 4.6 lakh, and over thirty times that of only options buyers at Rs 1.3 lakh.
Small capital, enormous turnover
The typical retail derivatives trader is not a large account. About 77% used peak margin below Rs 1 lakh. That group generated only 8% of turnover and absorbed 14% of losses, with an average loss of roughly Rs 44,000. The remaining 23% of traders — those deploying more than Rs 1 lakh — accounted for 92% of turnover and 86% of all losses, averaging about Rs 9.19 lakh each.
Traders below 30 generated derivatives turnover roughly 93 times the value of their equity portfolio; those above 50 managed 20 times. Traders earning under Rs 5 lakh a year churned about 75 times their portfolio value, against 14 times for those earning above Rs 1 crore. Investors in smaller cities outside the top 30 traded at about 72 times portfolio value, against 29 times for the top-30 group.
What is left afterwards
The most sobering section of the study looks at what loss-making traders own after the fact. Among roughly 1.10 crore individuals who lost money in derivatives during FY22–FY24, 77% held an equity portfolio at the end of FY26 worth less than a quarter of those cumulative losses. Only 18% held a portfolio larger than what they had lost.
At the extreme, traders who had lost more than Rs 1 crore in derivatives had a median equity portfolio of Rs 138 at the end of FY26. Those who had made more than Rs 1 crore had a median portfolio of about Rs 1.08 crore.