87.7% of Individual F&O Traders Lost Money in FY26, SEBI Study Finds

India’s retail derivatives market remains a difficult place for individual traders, with a new Securities and Exchange Board of India (SEBI) study showing that 87.7% of individual traders in equity futures and options lost money during FY26.

SEBI released two studies on August 20 examining retail participation, trading behaviour and profitability in the equity derivatives segment. The findings show that while overall retail participation and losses declined from the previous financial year, the majority of individual traders continued to lose money.

Individual traders recorded aggregate net losses of around ₹91,685 crore in FY26, compared with approximately ₹1.12 lakh crore in FY25. The number of active individual traders also fell by about 20%, from 98.1 lakh to 78.6 lakh. New entrants declined by around 40%, suggesting that retail participation in the segment has started to cool.

However, the decline in participation did not translate into significantly better outcomes for those who remained. The average loss per individual trader increased slightly to around ₹1.17 lakh during the year.

Small investors were particularly affected. SEBI found that nearly 78% of individual traders had equity portfolios worth less than ₹1 lakh. This group accounted for around 70% of aggregate losses, despite contributing roughly half of the total turnover generated by individual traders. About 35% of individual derivatives traders did not have any equity holdings.

Options trading was responsible for most of the damage. Around 92% of individual traders’ aggregate losses came from options, highlighting the risks associated with short-term derivatives trading. SEBI’s data also showed that nearly 97% of traders mainly followed option-buying strategies, while only about 2% were primarily options sellers.

The contrast between individual and professional participants was striking. Proprietary traders recorded gross trading profits of around ₹44,000 crore during FY26. Foreign portfolio investors generated about ₹14,000 crore, while corporates, mutual funds and partnership firms or LLPs also reported gross profits.

SEBI’s findings come after several regulatory measures aimed at reducing excessive retail participation and improving investor protection in derivatives. The latest data suggests that while participation has fallen, significant risks remain for individuals who continue to trade frequently in the F&O market.

The regulator’s studies also underline the importance of understanding transaction costs, trading strategies and the risks involved before entering the derivatives market.

For India’s growing retail-investor base, the message from the data is clear: a larger market does not necessarily mean easier profits. The sharp difference between individual losses and professional trading gains also raises questions about investor education, risk management and the level of expertise required to trade derivatives successfully.