Indian retail investors continued to face heavy losses in futures and options (F&O) trading in the financial year ended March 2026, losing a combined ₹91,685 crore, according to data provided by the government in Parliament.
The losses, while still substantial, were lower than the ₹1.12 lakh crore recorded in FY25, indicating that regulatory measures introduced by the Securities and Exchange Board of India (SEBI) helped reduce retail participation and overall losses in the equity derivatives segment.
However, the latest data also highlights a worrying trend: while the number of individual traders and aggregate losses declined, the average loss per person increased to ₹1,16,654 from ₹1,13,913.
Retail F&O losses fall to ₹91,685 crore
Retail investors recorded net losses of ₹91,685 crore in FY26, down from ₹1,11,788 crore in FY25.
That represents a reduction of approximately 18% year-on-year.
| Metric | FY25 | FY26 |
|---|---|---|
| Unique individual investors | 98.10 lakh | 78.60 lakh |
| Aggregate net losses | ₹1,11,788 crore | ₹91,685 crore |
| Average loss per person | ₹1,13,913 | ₹1,16,654 |
| Equity derivatives turnover | ₹213 lakh crore | ₹202 lakh crore |
The figures were disclosed by Minister of State for Finance Pankaj Chaudhary in a written reply to the Rajya Sabha.
FY25
98.10 lakh traders
↓
₹1.12 lakh crore losses
↓
₹1.14 lakh average loss
FY26
78.60 lakh traders
↓
₹91,685 crore losses
↓
₹1.17 lakh average loss
The numbers show that SEBI’s measures have reduced the size of the retail F&O market, but the traders who remain active are still suffering significant losses.
Number of retail traders falls sharply
One of the clearest changes in FY26 was the decline in the number of unique individual investors participating in equity derivatives.
The number fell from 98.10 lakh in FY25 to 78.60 lakh in FY26, a decline of nearly 20%.
This means roughly 19.5 lakh fewer unique individual investors participated in the equity derivatives segment during the year.
FY25
98.10 lakh
↓
FY26
78.60 lakh
↓
~19.5 lakh fewer traders
The decline coincided with a series of regulatory changes introduced by SEBI to reduce excessive speculation and risk-taking in the derivatives market.
Average loss per trader actually increases
Despite the decline in total losses, the average loss among individual traders increased.
The average loss rose from ₹1,13,913 in FY25 to ₹1,16,654 in FY26.
That represents an increase of roughly 2.4%.
This creates an important distinction between the overall market and individual trader experience.
Total retail losses
↓
₹1.12 lakh crore → ₹91,685 crore
Average loss
↑
₹1.14 lakh → ₹1.17 lakh
In other words, fewer people participated, reducing aggregate losses, but those who continued trading still experienced substantial losses.
Why are retail investors losing money in F&O?
Futures and options are leveraged financial instruments.
A relatively small amount of capital can provide exposure to a much larger underlying position.
This can magnify both profits and losses.
Small capital
↓
Leverage
↓
Large market exposure
↓
Small price movement
↓
Large gain or loss
Options trading can be particularly challenging because traders must not only predict the direction of the underlying asset but also account for factors such as time decay, volatility and option pricing.
For short-term traders, even being directionally correct does not necessarily guarantee a profit.
F&O is different from normal stock investing
Buying shares for delivery and trading derivatives involve very different risk profiles.
With a conventional equity investment, an investor buys an ownership stake in a company.
In F&O trading, the investor enters into a derivative contract whose value is linked to an underlying asset or index.
| Equity investing | F&O trading |
|---|---|
| Usually focused on ownership | Contract-based exposure |
| Often longer-term | Frequently short-term |
| No expiry for shares | Derivative contracts have expiry |
| Generally no leverage when fully paid | Leverage can magnify exposure |
| Lower trading frequency possible | Can encourage frequent trading |
The ability to trade frequently and with leverage is one reason derivatives can generate large losses for inexperienced traders.
SEBI’s regulatory measures reduce participation
SEBI introduced several measures from November 2024 onwards to strengthen risk management in the F&O market.
The measures included:
- Rationalisation of weekly index derivatives products
- Higher tail-risk coverage on options expiry days
- Higher contract sizes for index derivatives
- Rationalisation of monthly index derivative products
- Upfront collection of option premiums from buyers
- Removal of calendar-spread treatment on expiry days
- Intraday monitoring of position limits
Additional measures were introduced in May 2025 to streamline expiry days across exchanges and strengthen risk metrics for position limits.
SEBI reforms
↓
Higher trading requirements
+
Reduced expiry frequency
+
Greater risk monitoring
↓
Lower retail participation
↓
Lower aggregate losses
Weekly options trading faces tighter restrictions
Weekly options had become one of the most popular products among retail traders because they offered frequent opportunities to speculate on short-term market movements.
However, their short expiry periods also meant that traders could potentially lose their entire option premium very quickly.
SEBI’s measures sought to reduce excessive trading around frequent expiries by rationalising weekly index derivative products.
The objective was to reduce the frequency of highly speculative trades without shutting down the derivatives market altogether.
Contract sizes have been increased
SEBI also increased the minimum contract size for index derivatives.
A larger contract size means traders generally need more capital to take the same type of exposure.
Before
Smaller contract
↓
Lower capital requirement
After
Larger contract
↓
Higher capital requirement
↓
Potentially lower participation
This particularly affects smaller retail traders who may have limited capital.
Upfront option premium collection
Another measure requires option buyers to provide the option premium upfront.
The objective is to strengthen the risk-management framework and ensure that brokers and market infrastructure have appropriate funds available for option transactions.
Such measures can increase the capital discipline required for derivatives trading.
Intraday monitoring of position limits
SEBI has also strengthened monitoring of position limits during the trading day.
Previously, monitoring frameworks could be less responsive to rapidly changing positions.
Intraday monitoring allows exchanges and regulators to identify excessive positions more quickly.
Trader position
↓
Real-time monitoring
↓
Position-limit checks
↓
Risk management
This is particularly important in a market where large positions can be built rapidly.
F&O turnover also declines
The decline in retail participation was accompanied by a reduction in overall equity derivatives turnover.
Equity derivatives turnover fell from ₹213 lakh crore in FY25 to ₹202 lakh crore in FY26.
That represents a decline of approximately 5.2%.
FY25
₹213 lakh crore
↓
FY26
₹202 lakh crore
↓
~5.2% decline
The decline suggests that the regulatory changes affected not only the number of retail participants but also overall trading activity.
But the market remains enormous
Even after the decline, ₹202 lakh crore of annual equity derivatives turnover represents an enormous market.
India remains one of the world’s most active derivatives markets, particularly in index options.
The scale of the market means that even a modest change in retail participation can have significant consequences for brokers, exchanges and trading platforms.
Retail losses have accumulated over several years
The FY26 loss figure follows several years of substantial losses among individual F&O traders.
Earlier SEBI data showed that retail traders lost ₹2.87 lakh crore between FY22 and FY25.
The annual figures were:
| Financial year | Retail F&O net loss |
|---|---|
| FY22 | ₹40,824 crore |
| FY23 | ₹65,747 crore |
| FY24 | ₹74,812 crore |
| FY25 | ₹1,05,603 crore |
These figures illustrate how quickly retail losses expanded as participation in derivatives increased.
The FY26 figure of ₹91,685 crore means retail investors continued to lose a very large amount despite the regulatory tightening.
FY25 marked a major peak in losses
Retail losses reached around ₹1.05 lakh crore in FY25 according to SEBI data, making it the largest annual loss figure in the four-year period covered by earlier studies.
At the same time, the number of individual traders had increased significantly.
This created concerns that derivatives were becoming increasingly popular among investors who may not fully understand their risks.
More than nine in 10 traders have historically lost money
SEBI’s earlier studies have consistently shown a very high proportion of retail traders losing money.
For FY22-FY24, SEBI found that approximately 93% of individual traders incurred losses, with only 7.2% making a profit after accounting for trading costs.
The data provided a strong basis for regulators to introduce additional safeguards.
100 individual F&O traders
↓
~93 historically lost money
↓
~7 made profits
The exact profitability rate can vary depending on the period and methodology, but the overall pattern has remained clear: most individual F&O traders lose money.
Why options are particularly difficult
Options have several moving parts.
A trader buying an option needs the underlying asset to move sufficiently in the expected direction within a particular timeframe.
Even if the prediction is correct, the option can lose value because of time decay or changes in implied volatility.
Option value
=
Underlying price
+
Time
+
Volatility
+
Other pricing factors
This makes options considerably more complex than simply buying and holding a stock.
Frequent trading can increase costs
F&O traders also face transaction costs.
These can include:
- Brokerage
- Securities Transaction Tax
- Exchange charges
- GST
- Stamp duty
- Other regulatory charges
Even when individual trades generate small gains or losses, frequent trading can cause costs to accumulate.
SEBI’s earlier studies have specifically highlighted transaction costs as an important factor affecting retail profitability.
Trading gains
↓
Less transaction costs
↓
Actual net result
A strategy that appears profitable before costs can therefore become unprofitable after all expenses are included.
The problem is not simply lack of market knowledge
F&O losses cannot be explained only by whether an investor understands stock markets.
Derivatives require a different level of risk management.
A trader can correctly predict that the Nifty will rise but still lose money if:
- The move happens too slowly
- The option expires before the move
- Volatility falls
- The option premium was too expensive
- The position was too large
- Transaction costs consume the gains
This makes risk management just as important as market direction.
Social media has also changed retail trading
The growth of social media and trading platforms has made market information much more accessible.
Retail investors can now receive:
- Trading signals
- Options strategies
- Intraday calls
- Expiry-day recommendations
- “Guaranteed” profit claims
- Influencer commentary
This can encourage inexperienced investors to enter highly leveraged products without fully understanding the risks.
SEBI and market infrastructure institutions have repeatedly warned investors against blindly following tips and recommendations circulating through social media and messaging platforms.
Lower participation is a positive signal for regulators
From SEBI’s perspective, the decline from 98.10 lakh to 78.60 lakh unique individual investors is significant.
It suggests that the regulatory measures have had a measurable impact on participation.
98.10 lakh
↓
78.60 lakh
↓
~20% reduction
The decline in aggregate losses from ₹1.12 lakh crore to ₹91,685 crore provides another indication that the measures have reduced the scale of retail losses.
But higher average losses remain a concern
The increase in average losses complicates the picture.
If the objective is to protect retail investors, reducing participation is useful only if the investors who remain are also better protected.
The rise in average loss from ₹1,13,913 to ₹1,16,654 suggests that the remaining traders are still taking substantial risks.
Fewer traders
↓
Lower total losses
But
Higher loss per trader
↓
Risk remains significant
This could encourage regulators to focus not only on participation but also on investor education and risk disclosure.
What the numbers mean for brokers
Lower retail F&O participation can affect discount brokers and trading platforms.
Retail derivatives trading has historically been an important source of:
- Brokerage revenue
- Transaction-related revenue
- Customer engagement
- Trading activity
A decline in F&O volumes could therefore put pressure on some businesses that have built their platforms around active retail traders.
At the same time, brokers may benefit from a more sustainable investor base focused on long-term investing.
Impact on stock exchanges
Exchanges also benefit from trading activity through transaction and other market-related fees.
A reduction in derivatives volumes can therefore affect exchange revenues.
However, lower speculative activity may also contribute to a more stable derivatives market.
The policy trade-off is therefore between market activity and investor protection.
What the data means for retail investors
The latest numbers reinforce a simple message: F&O trading is highly risky, particularly for inexperienced retail investors.
The fact that retail investors collectively lost ₹91,685 crore in FY26 does not mean every individual trader lost money.
Some traders made profits.
But the aggregate numbers show that losses among individuals remain widespread.
Earlier SEBI research found that only a small minority of individual traders generated profits after costs.
F&O should not be treated like a shortcut to wealth
The attraction of derivatives is obvious.
A trader can potentially make large returns with relatively limited capital.
But the same leverage can produce large losses.
Leverage
↓
Potentially larger gains
+
Potentially larger losses
The risk-reward structure means that F&O should not be treated as a guaranteed or easy path to wealth.
Long-term investing is different
For investors primarily interested in building wealth over many years, diversified long-term investing is fundamentally different from short-term leveraged derivatives trading.
A long-term investor may focus on:
- Business fundamentals
- Earnings growth
- Valuation
- Diversification
- Asset allocation
- Investment horizon
An F&O trader is often focused on:
- Price movements
- Volatility
- Expiry
- Position sizing
- Leverage
- Short-term catalysts
These are very different approaches.
What happens next?
SEBI’s latest data suggests that its derivatives reforms have had a measurable effect.
The next challenge will be determining whether the decline in participation and losses can be sustained without unnecessarily reducing legitimate hedging and price-discovery activity.
The regulator will likely continue monitoring:
- Retail participation
- Options volumes
- Average trader losses
- Contract sizes
- Expiry-day activity
- Position concentrations
- Market liquidity
- Investor complaints
Regulation
↓
Market behaviour
↓
Data collection
↓
SEBI assessment
↓
Further policy changes if required
The bigger lesson from FY26
The biggest lesson from the latest data is not simply that retail traders lost ₹91,685 crore.
It is that reducing the number of participants alone does not eliminate the underlying risk.
Nearly 20 lakh fewer individual traders participated in FY26, yet the average loss among participants increased.
This suggests that investor behaviour, trading frequency, risk management and financial education remain important areas of focus.
Key takeaways
1. Indian retail investors lost ₹91,685 crore in equity F&O trading during FY26, according to data provided to Parliament.
2. The loss was lower than the ₹1,11,788 crore recorded in FY25, representing a decline of around 18%.
3. The number of unique individual F&O investors fell from 98.10 lakh to 78.60 lakh, a decline of nearly 20%.
4. Average loss per individual trader increased to ₹1,16,654 from ₹1,13,913.
5. Equity derivatives turnover declined to ₹202 lakh crore in FY26 from ₹213 lakh crore in FY25.
6. SEBI introduced several measures from November 2024 to reduce excessive risk-taking in F&O trading.
7. The measures included rationalising weekly index derivatives, increasing contract sizes, requiring upfront option-premium collection and strengthening intraday position-limit monitoring.
8. Earlier SEBI studies showed that around 93% of individual F&O traders incurred losses between FY22 and FY24.
9. Retail F&O losses had already reached ₹2.87 lakh crore between FY22 and FY25.
10. The FY26 data suggests SEBI’s regulatory measures reduced participation and aggregate losses, but significant risks remain for retail traders who continue to participate in leveraged derivatives.
Conclusion
Indian retail investors lost ₹91,685 crore in futures and options trading during FY26, providing another stark indication of the risks associated with leveraged derivatives trading.
The number is enormous, but the most revealing part of the latest data is the contrast between aggregate losses and average losses.
Total retail losses fell from ₹1.12 lakh crore in FY25 to ₹91,685 crore in FY26.
At the same time, the number of unique individual investors declined from 98.10 lakh to 78.60 lakh.
This suggests that SEBI’s regulatory measures have succeeded in reducing the scale of retail participation in the derivatives market.
However, the average loss per trader increased from ₹1,13,913 to ₹1,16,654.
That means the traders who remained active continued to face substantial financial risk.
The development is particularly important given the history of retail losses in India’s derivatives market.
SEBI’s earlier research found that around 93% of individual F&O traders lost money between FY22 and FY24, while aggregate retail losses reached ₹2.87 lakh crore over FY22-FY25.
The latest FY26 figure therefore does not represent an isolated event.
It is part of a broader pattern in which retail participation in F&O expanded rapidly before regulators began introducing increasingly stringent safeguards.
SEBI’s measures since November 2024 — including changes to weekly expiries, higher contract sizes, additional risk coverage, upfront premium collection and intraday monitoring — appear to have had a meaningful impact.
The number of retail traders fell by almost one-fifth, while overall equity derivatives turnover declined from ₹213 lakh crore to ₹202 lakh crore.
For the regulator, the challenge now is to determine whether these changes have struck the right balance.
Derivatives serve legitimate purposes, including hedging and price discovery.
But excessive speculative activity by inexperienced retail investors can create significant financial harm.
The latest numbers suggest that simply reducing access or participation is not enough.
Investor education, clearer risk disclosures, responsible trading practices and better understanding of leverage are equally important.
For retail investors, the lesson is straightforward.
F&O trading is not simply another way of buying stocks.
It involves leverage, expiry dates, volatility and complex pricing dynamics, meaning losses can accumulate rapidly.
The fact that retail investors collectively lost nearly ₹92,000 crore in one year should serve as a reminder that short-term derivatives trading carries a fundamentally different risk profile from long-term investing.
As India’s financial markets continue to expand, the future of retail participation in F&O will likely depend on whether investors become better informed and whether regulation can keep speculative excesses under control.
For now, the FY26 data sends a clear message: fewer retail traders are participating, but the risk for those who remain remains very high.
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