Majority of Individual Traders in Equity Derivatives Face Losses Despite Decline in Aggregate Losses: SEBI Report

A recent SEBI study reveals that nearly nine out of ten individual traders in the equity derivatives segment suffered losses in FY26, despite a drop in total losses from the previous year. Retail participation declined significantly, and options trading emerged as the primary loss driver.

According to a report released by the Securities and Exchange Board of India (SEBI) on Thursday, 87.7% of individual traders in the equity derivatives market incurred losses in the financial year 2025-26, despite a reduction in aggregate losses compared to the previous year. The net losses stood at approximately Rs 91,685 crore, down from about Rs 1.12 lakh crore in FY25.

The report indicated a 20% reduction in the number of active individual traders, dropping to 78.6 lakh from 98.1 lakh in FY25. Additionally, new participation saw a 40% decline, highlighting a waning interest in retail investment. The average loss per trader increased slightly to Rs 1.17 lakh, while transaction costs for traders were around Rs 25,000 crore for the year, contributing to a five-year total of approximately Rs 1 lakh crore in transaction costs.

Options trading was identified as accounting for 92% of the aggregate losses suffered by traders. The study showed that nearly 97% of participants predominantly engaged in option-buying strategies, which resulted in poorer outcomes compared to the small percentage of options sellers. Further data revealed that trading intensity correlated strongly with losses, with higher turnover linked to greater loss rates, particularly for younger investors and those from lower-income brackets. SEBI stated that 85% of trader-quarter observations resulted in losses, underscoring persistent financial challenges for most traders involved in equity derivatives.