Why 87.7% of Individual F&O Traders Lost Money in FY26: What SEBI Data Shows

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India's equity derivatives market became smaller in FY26.

Participation declined, new trader additions slowed sharply and millions of individuals who had traded in the previous year did not return.

Yet losses remained widespread.

SEBI's latest study found that 87.7% of individual equity-derivatives traders incurred net losses in FY26.

Aggregate net losses stood at ₹91,685 crore, while the average net loss per trader increased to around ₹1.17 lakh.

SEBI's revised FY25 estimate puts individual net losses at ₹1,11,788 crore.

The scale of the loss is only one part of the story.

SEBI's data also shows how transaction costs affected profitability, how heavily individual activity was concentrated in options and short-expiry contracts, and which participant categories recorded gross trading gains.

Together, those numbers provide a clearer picture of how individual participation in India's F&O market changed during FY26.

What changed in FY26?

SEBI's FY25-FY26 studies show a clear reduction in individual participation in the equity derivatives segment.

Active individual participation declined by around 18%.

New trader additions fell by nearly 40%.

At the same time, exits increased sharply.

SEBI described the FY26 decline as a partial retrenchment from the rapid expansion seen after FY21, with the overall trader base still substantially above earlier levels.

Aggregate losses fell, but average loss increased

Aggregate individual losses declined from approximately ₹1.12 lakh crore in FY25 to ₹91,685 crore in FY26.

That was a reduction of around 18%.

Individual participation also declined by roughly the same magnitude.

The average loss per trader moved in the opposite direction.

Among traders who actually ended the year with losses, SEBI reported an average loss of around ₹1.47 lakh.

Profit-making traders recorded an average profit of around ₹1.22 lakh.

How derivatives differ from owning equity

SEBI defines derivatives as financial instruments whose value is derived from an underlying security or financial instrument.

Futures and options are the two major exchange-traded equity derivative products.

A futures contract creates an obligation to transact at a predetermined price and date.

An option gives the buyer a right, while the seller carries the corresponding contractual obligation if that option is exercised.

SEBI identifies three common uses of derivatives:

• Hedging to manage price risk
• Speculation to take a view on price movements
• Arbitrage to capture price differences between related markets

The payoff structure also differs from owning shares.

SEBI describes derivatives as a zero-sum structure before costs: gains and losses across opposing positions offset each other.

Equity ownership has a different economic base because shareholders own a stake in a business whose profits, cash flows and dividends can change over time.

Why transaction costs matter

SEBI's FY26 profitability study provides one of the clearest measures of the effect of trading costs.

Before transaction costs:

After transaction costs:

The difference represents traders whose gross trading result was positive or near break-even but moved into a net loss after trading costs.

Individual equity-derivatives traders incurred around ₹25,000 crore of transaction costs in FY26.

SEBI estimated a similar amount in FY25.

Across FY22 to FY26, cumulative transaction costs for individuals reached approximately ₹1 lakh crore.

These costs include components such as:

• brokerage
• Securities Transaction Tax
• exchange transaction charges
• statutory levies
• other trading-related charges

Brokerage accounted for roughly 44% of FY26 transaction costs, while STT accounted for around 27%.

SEBI also reported that STT paid by individual derivatives traders increased from about ₹1,291 crore in FY22 to ₹6,645 crore in FY26.

Where gross trading profits were concentrated

SEBI's study also breaks down gross trading profit and loss by participant category before transaction costs.

SEBI also examined the role of algorithmic trading among professional participant categories.

About 99% of gross profits earned by FPI and proprietary-trading entities came from entities classified as algo entities, meaning the entity had placed at least one algorithmic order during the year.

These participant groups use derivatives across a range of activities including hedging, arbitrage, market-making, portfolio management and proprietary trading.

Options dominated individual F&O activity

Individual participation in India's equity derivatives market was concentrated overwhelmingly in options.

Across FY25 and FY26:

In FY26, approximately 93.4% of individual traders traded only options.

Options also accounted for around 92% of aggregate individual derivatives losses.

SEBI found a material difference in the proportion of loss-making traders across the two main derivative products.

Options require an upfront premium from the buyer and can provide exposure to an underlying index or security with a smaller initial cash outlay than purchasing the underlying asset directly.

SEBI's investor guidance identifies leverage as one of the key risks in derivatives because gains and losses can be magnified relative to the amount initially committed.

Most index-options turnover stayed close to expiry

The trading-behaviour study also examined when individual index-options turnover occurred relative to contract expiry.

In FY25, around 70% of index-options turnover occurred on expiry day.

In FY26, this declined to around 59%.

The broader concentration near expiry remained high.

The data shows that individual index-options activity remained heavily concentrated in short-duration contracts.

The portfolio size and turnover mismatch

SEBI compared individual derivatives participation with the size of traders' underlying equity portfolios.

Across FY25 and FY26, around 122.6 lakh individuals traded in equity derivatives.

Among them:

• 35% had no equity portfolio at the end of FY26
• 78% had an equity portfolio worth less than ₹1 lakh

SEBI then examined traders with both:

• an equity portfolio below ₹1 lakh, and
• annual derivatives turnover above ₹1 crore

This group represented approximately 13% of individual traders.

It accounted for around:

The data shows that derivatives turnover can be many times larger than the value of an individual's underlying equity holdings.

That gap is especially relevant because derivatives exposure is determined by contract value and position size rather than by the size of the investor's cash-market portfolio.

What the age and income data shows

Younger traders continued to make up a large share of individual derivatives participation.

In FY26:

• 43% of individual traders were below 30
• around 35% were between 30 and 40
• almost four out of five individual traders were below 40

Among traders below age 30, approximately 88.6% recorded losses.

SEBI also analysed declared income for the subset of traders where income information was available.

About three-fourths of that group fell within the below-₹5 lakh annual income category.

Within this income group:

• around 88% recorded losses
• the group generated approximately 43% of turnover
• it accounted for roughly 53% of losses

The income analysis applies to the subset of traders for whom income information was available in SEBI's dataset.

How participation changed after SEBI's measures

SEBI introduced a series of equity-derivatives measures beginning in late 2024.

These included:

• rationalisation of weekly index-derivative contracts
• higher minimum contract sizes
• upfront collection of option premiums
• removal of calendar-spread treatment on expiry day
• additional tail-risk coverage on expiry day
• changes to expiry-day structure and position monitoring

FY26 subsequently recorded several changes in individual participation.

SEBI's study presents these as observed changes in participation and trading behaviour.

SEBI also states that the analysis is descriptive and does not establish causal relationships between every regulatory measure and every change observed in FY26.

Even after the reduction in participation, 87.7% of individual traders recorded net losses.

F&O trading and equity investing are structurally different

Equity investment and derivative trading both take place within securities markets, but the economic exposure is different.

SEBI classifies derivatives as instruments used for hedging, speculation and arbitrage.

Leverage means a relatively small initial amount can create exposure to a substantially larger underlying value.

Options also contain a time component because contracts expire.

Transaction costs apply each time positions are created, adjusted or exited.

What the FY26 data establishes

SEBI's latest studies give us a clearer picture of India's individual derivatives market after a year of lower participation.

Active individual traders declined.

New entries slowed sharply.

Aggregate net losses declined from around ₹1.12 lakh crore to ₹91,685 crore.

The average net loss per trader increased to around ₹1.17 lakh.

Transaction costs remained substantial at approximately ₹25,000 crore.

Options accounted for the overwhelming majority of individual participation and around 92% of aggregate individual losses.

Most index-options turnover remained concentrated within seven days of expiry.

Individuals collectively recorded gross trading losses of around ₹72,000 crore, while proprietary traders and FPIs recorded the largest gross gains among participant categories.

SEBI also found substantial derivatives turnover among traders with small or no underlying equity portfolios.

The FY26 data therefore provides a measurable distinction between market participation and profitable market participation.

For derivatives, the relevant outcome is the final net result after trading P&L and all transaction costs are accounted for.

FAQs

1. What percentage of individual F&O traders lost money in FY26?

SEBI found that 87.7% of individual equity-derivatives traders incurred net losses in FY26. The corresponding figure for FY25 was 90.9%.

2. How much did individual F&O traders lose in FY26?

Aggregate net losses were approximately ₹91,685 crore in FY26. SEBI's revised FY25 estimate was ₹1,11,788 crore, taking combined losses across FY25 and FY26 to roughly ₹2.03 lakh crore.

3. What was the average loss per trader?

SEBI reported an average net loss of around ₹1.17 lakh per individual trader in FY26. Among traders who ended the year in loss, the average loss was approximately ₹1.47 lakh.

4. How much did individual traders pay in transaction costs?

Individual equity-derivatives traders incurred approximately ₹25,000 crore in transaction costs in FY26. Cumulative transaction costs across FY22 to FY26 were around ₹1 lakh crore.

5. How did transaction costs affect the percentage of loss-making traders?

SEBI found that 82.1% of individual traders were loss-making before transaction costs. After transaction costs, the share increased to 87.7%.

6. Were losses concentrated in options?

Yes. Options accounted for approximately 92% of aggregate individual equity-derivatives losses in FY26. About 93.4% of individual derivatives traders traded only options during the year.

7. Who recorded the largest gross trading profits?

Before transaction costs, proprietary traders recorded approximately ₹44,000 crore of gross trading profits and FPIs around ₹14,000 crore. Individuals collectively recorded gross trading losses of approximately ₹72,000 crore.

8. What are derivatives used for?

SEBI identifies hedging, speculation and arbitrage as common uses of derivatives. Futures and options derive their value from an underlying security or financial instrument and can involve leveraged exposure.

Disclaimer: This article is for educational and informational purposes only. Futures and options are leveraged market instruments and involve substantial risk. The figures discussed are based on SEBI studies of historical individual trading activity in the equity derivatives segment and do not predict the outcome of future trades. Nothing in this article should be treated as investment, trading or derivatives advice.