SEBI’s studies on equity derivatives, explained with the real numbers — FY25 losses of ₹1.06 lakh crore, who profits instead, and what the data means for you.
This is not an opinion piece about derivatives. It is a summary of what India’s securities regulator found when it examined the trading records of millions of individual traders.
The numbers are unusually clear, and they have been consistent across four separate studies over several years.
The Headline Findings
FY25 (published July 2025)
SEBI’s study, covering the top 13 stock brokers with a combined base of around 96 lakh unique F&O traders, found:
- Over 91% of individual traders in the equity derivatives segment incurred net losses, broadly unchanged from the previous year
- Aggregate net losses rose to ₹1,05,603 crore in FY25, from ₹74,812 crore in FY24 — an increase of about 41%, after accounting for transaction costs
- The number of unique individual traders fell from 61.4 lakh in Q1 FY25 to 42.7 lakh in Q4 FY25
- Unique retail participants in the derivatives segment dropped roughly 20% year on year, though still about 24% higher than two years earlier
The three-year study (published September 2024)
Covering April 2021 to March 2024:
- 93% of individual traders incurred losses
- Aggregate losses exceeded ₹1.8 lakh crore over the three years
- Only 7.2% of individual traders were profitable across the period, and just about 1% earned profits exceeding ₹1 lakh after transaction costs
- The top 3.5% of loss-makers — roughly 4 lakh traders — faced an average loss of about ₹28 lakh each over the three years
The earlier study (FY22)
- 89% of individual traders lost money, with an average loss of ₹1.1 lakh
- Among active traders, 90% lost, averaging ₹1.25 lakh
- The top 1% of traders accounted for around 51% of total net profit; the top 5% accounted for about 75%
Reading These Numbers Properly
The consistency is the point
Four studies, different periods, different sample sizes, different market conditions — including a strong bull phase — and the loss rate stayed between 89% and 93%. This is not a bad-market artefact. It is a structural feature of the segment.
The rebuttal, and why it is weak
The most common response is: “success rates are low in every competitive field.”
The comparison does not hold, for three reasons.
First, the distribution. In the FY22 data, the average loss of the 90% who lost was over fifteen times the average earnings of the 10% who profited. This is not a field where most participants earn a modest living and a few excel. It is a transfer.
Second, the counterfactual is not zero. Someone who fails a professional exam has spent time. Someone who loses in derivatives has spent capital that would otherwise have compounded. The FY25 aggregate net loss of ₹1.06 lakh crore is money that left household balance sheets in twelve months.
Third, the costs are structural. SEBI found that transaction costs — brokerage, STT, exchange charges, stamp duty, GST — consumed a substantial share of turnover. Because these are levied on transaction value regardless of outcome, high-frequency strategies pay them repeatedly whether they win or lose.
Who is on the other side
SEBI’s analysis found that most derivative profits were generated by larger entities using algorithmic and high-frequency trading — proprietary desks and foreign portfolio investors. These participants operate with co-located servers, lower transaction costs, dedicated risk systems and full-time quantitative teams.
That is the actual competition. Not other retail traders.
What the Regulator Did About It
SEBI has introduced a sequence of measures since October 2024. Chronologically:
October 2024 framework (effective from 20 November 2024) – Weekly expiry contracts limited to one benchmark index per exchange – Larger contract lot sizes, raising the minimum capital per trade – Upfront collection of option premium from buyers – Removal of calendar spread benefit on expiry day – Intraday monitoring of position limits – Additional margin on expiry-day short options
May 2025 circular, phased July to December 2025 – Delta-based Future Equivalent (FutEq) open interest replacing notional open interest, so exposure is measured by actual price sensitivity – Market-wide position limits linked to cash market liquidity — free float and average daily delivery value – Index options position limits of ₹1,500 crore net delta-adjusted end-of-day and ₹10,000 crore gross, applied per PAN – Positions taken after a stock enters ban period must reduce delta-based open interest – At least four random intraday MWPL checks per session – Tighter eligibility for derivatives on non-benchmark indices
September 2025 expiry restructuring – All equity derivative contracts must expire on Tuesday or Thursday – NSE moved to Tuesday, BSE to Thursday, ending a 25-year Thursday convention
Did it work?
Partially. SEBI’s December 2024–May 2025 comparison found index options turnover down 9% in premium terms and 29% in notional terms year on year, with unique retail participants down about 20%. But volumes remained above levels from two years earlier, and the loss ratio stayed near 91%.
Fewer people are losing. The proportion who lose has not changed.
What This Should Change in Your Behaviour
If you have not started
Do not treat this as a challenge to beat the odds. The 9% who profit are disproportionately institutional or full-time professionals with capital, infrastructure and risk systems. Build the equity portfolio first.
If you are currently trading derivatives
Answer four questions honestly:
- What is your net P&L over the last 24 months, after brokerage, STT, exchange charges, stamp duty, GST and taxes? Not your best month. The full period.
- Is that number better than a Nifty index fund over the same window?
- Do you have written rules for entry, exit, position size and maximum daily loss — and do you follow them?
- What percentage of your net worth is exposed?
If the answer to the first two is unfavourable, the honest conclusion is that the activity is costing you. That is not a character judgement; it is what the data says about the base rate.
The specific behaviours the data implicates
- Increasing size after losses to recover them
- Trading with borrowed money or funds needed for goals
- Following paid “tips” or option calls from unregistered sources
- Treating index options as an income strategy without understanding assignment and gap risk
Where Legitimate Hedging Fits
Derivatives exist for risk transfer. A shareholder buying protective puts, or an exporter hedging currency, is using them as intended. Selling covered calls against long-held stock is a defined-risk strategy. None of these resembles buying weekly out-of-the-money index options with a directional view.
The distinction is whether the derivative reduces an existing exposure or creates a new leveraged one.
Frequently Asked Questions
Is the 91% figure only for option buyers?
No. It covers individual traders in the equity derivatives segment overall, including futures and options, buyers and sellers.
Does the loss rate improve with experience?
The studies do not show a segment of individual traders that reliably turns profitable at scale. The concentration of profits at the very top — around 1% of traders in the FY22 data — suggests a small group with structural advantages rather than a learning curve most participants climb.
Can I check the original studies?
Yes. SEBI publishes them under press releases and reports on sebi.gov.in. Reading the primary document is worth the time.
Are the newer rules making it safer?
They have reduced participation and turnover and improved risk monitoring. They have not changed the proportion of individual traders who lose.
Sources and Further Reading
- SEBI press release, September 2024: updated study on individual traders in equity F&O, FY22–FY24
- SEBI study on individual traders in the equity derivatives segment, FY25 (July 2025)
- SEBI circular dated 1 October 2024 on the index derivatives framework
- SEBI circular dated 29 May 2025 on risk monitoring in equity derivatives
- SEBI Investor Education portal — investor.sebi.gov.in