₹91,685 cr lost: 88% of individual traders lost money in FY26; options drove 92% of losses

The number of individual traders in India’s equity derivatives market fell sharply in FY26. Yet for those who stayed, the risk of losing money remained high.

A new SEBI study on the profitability of individual traders in the equity derivatives segment shows that 87.7% of individual traders incurred net losses in FY26, even as aggregate losses declined. The study also highlights the dominant role of options, rising transaction costs and the concentration of losses among a relatively small group of traders.

SEBI found that the number of active individual traders fell 18% year-on-year to 87.5 lakh in FY26. The decline was particularly pronounced among smaller traders, with new entrants falling sharply.

This means the decline in aggregate losses needs context: the market had significantly fewer individual participants.

Aggregate losses fell — but not by enough to change the picture 

Individual traders' aggregate net losses declined about 18%, from ₹1,11,788 crore in FY25 to ₹91,685 crore in FY26.

That was the first annual decline in aggregate losses during FY22-FY26. But the loss figure remained substantially higher than in earlier years. Over FY22-FY26, individual traders accumulated around ₹3.85 lakh crore in net losses.

More importantly, the average loss per trader actually increased. It rose from about ₹1.14 lakh in FY25 to ₹1.17 lakh in FY26, a 2.4% increase. In other words, fewer people traded, but the financial hit remained significant for those who lost money.

Options remain the biggest danger zone 

The biggest takeaway from the study is the overwhelming dominance of options in retail losses.

Options accounted for 92% of aggregate individual losses in FY26. The proportion of loss-makers was also far higher among options traders than futures traders. About 87.7% of options traders lost money, compared with about 66% of futures traders.

Index options were particularly significant. Their trader base fell 21% to 74.8 lakh in FY26, while aggregate losses in the segment declined from ₹88,529 crore to ₹71,269 crore — a fall of about 20%.

The pattern shows why the broader derivatives market cannot be viewed simply as one homogeneous product. The risk profile is considerably different across futures and options.

Why are options so risky for individual traders? 

SEBI's data shows that retail trading remains heavily concentrated in very short-duration options.

In FY25, 70% of Index Options turnover took place on the expiry day, or 0DTE — contracts with zero days left to expiry. Another 80% occurred within one day of expiry and 98% within one week.

After SEBI's regulatory measures, the concentration eased in FY26: 0DTE's share fell to 59%, while 75% of turnover still occurred within one day of expiry and 97% within one week. Longer-dated contracts remained marginal, accounting for only 3% of turnover beyond seven days to expiry.

So, while expiry-day concentration moderated, retail activity remained overwhelmingly focused on contracts with very little time to maturity.

Average loss is bigger than the average profit 

Another striking finding is the gap between what winners make and what losers lose. In FY26, the average loss among loss-making traders was ₹1.47 lakh, compared with an average profit of ₹1.22 lakh among profit-makers.

That means the average loss was about 21% higher than the average profit. The gap narrowed from earlier years but remained firmly tilted towards losses. The study also found that losses were highly concentrated. About 23% of traders accounted for nearly 90% of total losses.

Transaction costs are another drag 

Trading costs remain a significant part of the equation. Individual traders incurred roughly ₹24,800 crore in transaction costs in both FY25 and FY26. Despite an overall decline in derivatives turnover, costs remained broadly unchanged because higher Securities Transaction Tax, or STT, offset declines in brokerage and exchange charges.

The average transaction cost per trader rose from ₹26,027 to ₹31,628 in FY26.

Brokerage accounted for 44% of transaction costs, followed by STT at 27%, exchange transaction charges at 16% and GST at 11%. Over FY22-FY26, individual traders paid approximately ₹1 lakh crore in transaction costs.

The impact was particularly significant for loss-makers. Transaction costs represented 35% of their gross losses, compared with 21% of gross profits for traders who made money.

Smaller portfolios face a disproportionate risk 

SEBI also examined traders' underlying equity holdings and found a strong relationship between portfolio size and losses.

About 43 lakh traders, or 35% of EDS traders over FY25-FY26, had no underlying equity portfolio at the end of FY26. Around 95 lakh traders had equity portfolios below ₹1 lakh.

This group accounted for only 51% of turnover but 70% of total losses. Even more strikingly, traders with portfolios below ₹1 lakh and turnover above ₹1 crore represented 13% of traders but accounted for 52% of aggregate losses. SEBI found that the incidence of losses declined consistently as portfolio size increased.

Younger and lower-income traders are particularly exposed 

The study also examined demographic patterns. Traders below 30 years accounted for 43% of all individual traders in FY26. But their loss incidence was higher: 89% of traders below 30 lost money, compared with 81% among traders above 60.

Income also mattered. Around three-fourths of individual derivatives traders were in the below-₹5 lakh annual income category. They accounted for 43% of turnover but 53% of aggregate losses. About 88% of traders in this income group were loss-makers, compared with 81% among traders earning above ₹1 crore.

Did SEBI's regulatory measures work? 

SEBI introduced several measures during FY25 to curb excessive speculation and strengthen risk management. These included restricting weekly derivative contracts to one index per exchange, increasing minimum contract sizes, requiring upfront collection of option premiums, withdrawing calendar-spread benefits on expiry day and imposing additional Extreme Loss Margin requirements on short options positions on expiry day.

The measures were followed by a significant decline in retail participation, particularly in index options. Between Q2 and Q4 FY25, options participation fell 25.8%, with index options declining 26.8%.

However, SEBI cautions that the study does not establish a causal relationship between the regulatory measures and changes in participation or outcomes.

The data also shows that the market adapted. Average turnover per remaining index-options trader increased 12%, while index-futures turnover per trader rose 20%. Index-options premium turnover initially fell after the measures but subsequently recovered strongly during FY26.