Why 9 Out of 10 F&O Traders Lose Money: What SEBI's Studies Actually Show
SEBI has now studied individual futures and options traders three times. Each time, around nine in ten lost money. Here is what the data says, the structural reasons behind it, and what has changed since the regulator stepped in.
By Pradeep RawalNISM-certified (Series XV & VIII) · Updated · 6 min read
Key takeaways
- SEBI's September 2024 study found that about 93% of over one crore individual F&O traders lost money between FY22 and FY24, with aggregate losses of about ₹1.8 lakh crore.
- Its July 2025 study found that 91% of individual traders lost money in FY25, and their net losses widened 41% to ₹1,05,603 crore, from ₹74,812 crore in FY24.
- The main drivers are transaction costs, time decay working against option buyers, leverage, and competition with professional and algorithmic traders.
- Since November 2024 SEBI has raised minimum contract sizes, limited weekly expiries to one index per exchange and tightened margins; Budget 2026 raised STT on futures and options from 1 April 2026.
- If you trade F&O, treat it as a high-risk activity with a small, fixed risk budget, strict position sizing and a written plan; never with money you need.
"Ninety percent of traders lose money" used to be a saying. In India it is now a measured fact. The Securities and Exchange Board of India (SEBI) has analysed the profit and loss of every individual trader in the equity derivatives segment, using exchange data, in three studies. The results have been remarkably consistent, and they explain why the regulator has steadily tightened the rules since 2024.
What the three studies found
| Study | Period | Individuals who lost money | Losses |
|---|---|---|---|
| January 2023 | FY 2021-22 | About 89% | Average loss of about ₹1.1 lakh per loss-making trader |
| September 2024 | FY 2021-22 to FY 2023-24 | About 93% of over 1 crore traders | Aggregate net losses of about ₹1.8 lakh crore over three years, including transaction costs |
| July 2025 | FY 2024-25 | 91% | Net losses of ₹1,05,603 crore, up 41% from ₹74,812 crore in FY24 |
The September 2024 study added detail that is worth remembering: only about 7% of individual traders made a profit over the three years, and an even smaller share made more than ₹1 lakh after costs. Meanwhile, traders spent large sums on transaction costs, and proprietary traders and foreign investors, many running algorithmic strategies, earned substantial profits.
Why the odds are stacked against individual traders
1. Costs on every trade
Each option trade pays brokerage, exchange transaction charges, SEBI fees, stamp duty, GST and securities transaction tax (STT), plus the bid-ask spread. They look tiny per order. For a trader buying and selling one lot of an ATM NIFTY option at around ₹100 four times a day, the explicit charges come to roughly ₹63 per round trip, about ₹250 a day, or about ₹61,268 a year at 245 trading days, before spreads and slippage. The trader must earn that much just to break even.
From 1 April 2026, STT on the sale of options rose from 0.1% to 0.15% of the premium, and on futures from 0.02% to 0.05% of the traded value. Frequent traders pay it on every sell order.
2. Time decay works against buyers
An option's price has two parts: intrinsic value (what it is worth if exercised now) and time value (the price of the possibility of a favourable move). Time value shrinks every day and reaches zero at expiry. Here is how the theoretical price of an at-the-money NIFTY weekly straddle (one call plus one put) falls if the index does not move, with NIFTY at 24,000 and implied volatility of 13%:
| Time to expiry | Call | Put | Straddle | Straddle as % of NIFTY |
|---|---|---|---|---|
| 4 days | 139.0 | 121.9 | 260.9 | 1.09% |
| 3 days | 119.3 | 106.5 | 225.9 | 0.94% |
| 2 days | 96.5 | 87.9 | 184.4 | 0.77% |
| 1 day | 67.3 | 63.0 | 130.3 | 0.54% |
| Expiry day, 2 hours left | 33.1 | 32.0 | 65.2 | 0.27% |
A buyer of this straddle four days before expiry pays about 261 points, so NIFTY must move more than about 1.09% (around 261 points) in either direction by expiry just to break even before costs. Much of the time it does not, and the premium decays away. This is why most short-dated options expire worthless, and why SEBI found that buyers, who are the majority of retail traders, lost heavily.
3. Leverage magnifies mistakes
Futures and option selling need margin of only a fraction of the contract value. A 2% move in NIFTY can be a 15% to 25% change in the margin posted. Losses arrive fast, and traders often add to losing positions or double down to recover, which turns small losses into large ones.
4. You are trading against professionals
The other side of a retail order is often a proprietary desk or an algorithm with faster execution, better data, lower costs and strict risk controls. In a zero-sum market before costs, the less-equipped participant tends to lose.
5. Behaviour
Overtrading, revenge trading after a loss, cutting winners early and letting losers run, and trading on tips or social media are well-documented behaviours. They are not character flaws; they are normal human reactions to risk and uncertainty, which is why rules matter.
What SEBI changed, and what it means
After the 2024 study, SEBI introduced a set of measures from November 2024 to curb speculation in index derivatives, and NSE adjusted its contracts:
- Higher minimum contract size: at least ₹15 lakh at introduction. The NIFTY lot was raised to 75 in late 2024 and set at 65 from January 2026.
- One weekly expiry per exchange: only one benchmark index per exchange has weekly options (NIFTY on NSE). NSE's weekly NIFTY expiry moved to Tuesday from September 2025.
- Upfront collection of option premiums from buyers, and an extra margin on short options on expiry day.
- No calendar-spread margin benefit on expiry day and intraday monitoring of position limits.
The July 2025 study noted that trading activity by individuals fell after these measures, but losses among those who kept trading widened in FY25. Budget 2026's STT increase adds to costs again. The structural disadvantages above have not changed.
If you still want to trade F&O
- Use only risk capital: money whose total loss would not affect your goals, separate from savings and the emergency fund.
- Size every position by risk, not by margin available. Risking 1% to 2% of trading capital per trade keeps a losing streak survivable. Use the position size calculator.
- Write rules before you trade: entry, exit, stop loss and maximum daily loss. Stop for the day when the daily limit is hit.
- Count every cost and review results monthly from your broker's P&L statement, not from memory.
- Test before you trade, honestly. Our backtesting case study shows how a strategy that looks profitable can lose money after costs.
- Keep long-term investing separate. Most wealth is built by owning businesses for years, not by trading them for minutes.
The bottom line
SEBI's data leaves little room for doubt: for individuals as a group, equity derivatives trading has been a large and persistent transfer of money to professionals, brokers and the exchequer. A small minority do profit, usually with tested systems, low costs and strict risk control. If you choose to try, do it with money you can afford to lose and with the discipline of a business, and keep it far away from the savings your future depends on.
Frequently asked questions
Who makes money if most individuals lose?
SEBI's studies found that proprietary traders and foreign portfolio investors, many using algorithms, earned large gross profits in the same period. Exchanges, brokers and the government also earn through fees and taxes on every trade.
Is option buying safer than option selling?
An option buyer's loss is limited to the premium paid, which feels safer, and SEBI found most retail traders were buyers. But buyers lose a little to time decay every day, and most short-dated options expire worthless. Sellers win more often but face occasional very large losses. Neither is safe.
Are F&O losses tax deductible?
F&O results are non-speculative business income. Losses can be set off against other business income (not salary) in the same year and carried forward for 8 years if the return is filed on time, usually with books of account and possibly an audit depending on turnover.
What is the minimum contract size now?
Since November 2024, SEBI requires index derivative contracts to have a value of at least ₹15 lakh when introduced. NSE revised lot sizes accordingly; the NIFTY lot was 75 through 2025 and has been 65 since January 2026.
Sources and further reading
- SEBI: Analysis of profit and loss of individual traders dealing in equity F&O segment (September 2024)
- SEBI: Comparative study of growth in equity derivatives segment (July 2025)
- SEBI circular: measures to strengthen the equity index derivatives framework (October 2024)
- NSE circular: revision in market lot of index derivatives (effective January 2026)
- Union Budget 2026-27: STT changes for futures and options
About the author
Pradeep Rawal is an NISM-certified market professional (Series XV Research Analyst and Series VIII Equity Derivatives) with more than 15 years in personal finance and stock market education. He founded Financial Nirvana, wrote the book From Cubicles to Wealth Creation, teaches money and investing workshops, builds quantitative tools and backtesting systems, and writes about personal finance with the working shown.
This article is for education only and is not investment, tax or legal advice. Tax rules quoted are for the tax year 2026-27 (FY 2026-27) unless stated, and can change; check the latest position with the Income Tax Department or a qualified professional before acting. Examples use assumed returns that are not guaranteed.
