Key Details
SEBI’s Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26) measures the scale and distribution of trading losses. Its accompanying study, Trading Behaviour of Individual Traders in the Equity Derivatives Segment, examines the strategies, capital and trading patterns associated with these outcomes.
Area | What the SEBI Studies Find |
|---|---|
Participation | Active individual traders declined 18%, from 106.2 lakh in FY2024–25 to 87.5 lakh in FY2025–26. |
Profitability | 87.7% of traders in SEBI’s broker-level sample incurred net losses in FY2025–26, down from 90.9% a year earlier. |
Scale of losses | Aggregate net losses declined 18% to ₹91,685 crore, but average net loss per trader increased 2.4% to ₹1.17 lakh. |
Options exposure | 97% of traders in SEBI’s behavioural sample were predominantly options buyers. Options accounted for 92% of aggregate individual losses in the wider profitability study. |
Trading intensity | Traders active for more than 100 days represented 42% of traders but 94% of turnover and 87% of losses in the behavioural sample. |
Persistence | Among traders active in every year from FY2021–22 to FY2025–26, 65.6% lost money in all five years; only 0.5% were profitable every year. |
Participation Fell, but the Average Loss Increased
The number of active individual equity-derivatives traders declined markedly following SEBI’s measures introduced from November 2024. Participation in index options fell particularly sharply after limits were placed on weekly expiries and contract sizes were increased.
The reduction in participation coincided with an 18% fall in aggregate net losses, from a revised ₹1.12 lakh crore in FY2024–25 to ₹91,685 crore in FY2025–26. The improvement was less evident at the individual level: average net loss per trader rose from ₹1.14 lakh to ₹1.17 lakh.
The findings therefore present a mixed picture. Fewer individuals entered or remained in the market, but the financial exposure of those who continued trading did not fall proportionately.
Frequent Trading Was Associated With Larger Losses
Trading was highly concentrated among the most active participants. Those trading on more than 100 days accounted for 94% of turnover, even though they represented 42% of the behavioural sample.
SEBI also found that greater experience did not necessarily improve results. The share of loss-makers increased from around 91% among first-year traders to more than 95% among those active for four or more consecutive years.
Losses were persistent across time:
Around 90–92% of traders who had lost money in each of the preceding two years lost again in the following year.
Among traders active throughout the five-year period, nearly two-thirds lost money every year.
Even among traders with cumulative losses exceeding ₹10 lakh, around 88% continued trading.
These are associations rather than proof that frequent trading causes losses. They nevertheless challenge the assumption that continued participation automatically produces sufficient experience or discipline to improve outcomes.
Options Buying Remains the Dominant Strategy
Individual participation is overwhelmingly concentrated in options. In the broader profitability study, 99.3% of traders dealt in options at least once, while 93% traded only in options.
The smaller behavioural sample provides a closer view of trading strategies:
93% were exclusively options buyers, and another 4% were predominantly buyers.
Options buyers had a high probability of losing money and generated the largest share of aggregate losses.
Predominant options sellers had a lower loss incidence of around 44%, but losing sellers faced much larger losses—averaging approximately ₹51.7 lakh in FY2025–26.
The risks are therefore different. Options buyers commonly experience repeated premium losses, while sellers may appear profitable more often but remain exposed to infrequent and potentially severe losses.
Small Capital Does Not Always Mean Limited Risk
Around 77% of traders in the behavioural sample deployed peak margin below ₹1 lakh. They accounted for a relatively small share of turnover and total losses, but their probability of losing money remained close to 90%.
The remaining 23%, who deployed more than ₹1 lakh, generated 92% of turnover and 86% of losses. Higher-capital traders had a lower loss incidence, but the amount lost when trades went wrong was substantially larger.
The profitability study identifies a related mismatch between derivatives activity and underlying investments. Traders with equity portfolios below ₹1 lakh constituted 70% of aggregate losses over the two years. Within this group, traders generating derivatives turnover above ₹1 crore represented only 13% of traders but accounted for 52% of losses.
Derivatives Trading Was Often Detached From Equity Ownership
In FY2025–26, 18.6 lakh derivatives traders—24% of the behavioural study’s wider sample—recorded no cash-market turnover. More than half had cash-market turnover below ₹1 lakh.
SEBI also examined the subsequent equity holdings of traders who had incurred derivatives losses between FY2021–22 and FY2023–24. Among approximately 1.10 crore such traders, 77% held an equity portfolio in FY2025–26 worth less than one-quarter of their earlier cumulative derivatives losses.
This does not establish that derivatives losses caused lower wealth accumulation. The analysis captures only demat-held equities and equity mutual funds—not deposits, property, debt investments or liabilities. It nevertheless indicates that derivatives exposure was frequently much larger than visible participation in underlying securities.
Transaction Costs Added Materially to Losses
Individual traders incurred approximately ₹24,859 crore in transaction costs during FY2025–26. These costs converted around 4.4 lakh traders who were profitable before costs into net loss-makers.
Securities Transaction Tax increased to ₹6,645 crore and represented 27% of total transaction costs. Brokerage, exchange charges, GST and other levies further raised the threshold that frequent traders had to cross before earning a net profit.
Policy Relevance
The two studies suggest that measuring regulatory success only through lower participation or turnover would be incomplete. Investor outcomes, trading intensity and repeat losses also need to be tracked.
Risk communication could reflect the strategy used. Options buyers and sellers face different loss patterns and should not receive identical warnings.
Cumulative-loss information may be more useful than generic disclosures. Trading platforms could make multi-year losses, transaction costs and the frequency of loss-making periods more visible before additional trades are placed.
High turnover relative to available capital deserves closer attention. Behaviour-based alerts could identify when trading exposure becomes disproportionate to margin or underlying investments.
Experience should not be treated as an adequate safeguard. The persistence of losses among long-standing traders indicates that investor education alone may not correct high-risk behaviour.
The post-November 2024 measures require outcome-based evaluation. Lower trader numbers should be assessed alongside changes in loss incidence, average losses, trading concentration and activity close to expiry.
The studies are descriptive and do not establish that a particular strategy or regulatory change caused the observed outcomes. Some detailed behavioural findings are also based on a random sample of 5,050 traders and should be read as indicative rather than market-wide estimates.
Follow the Full SEBI Studies Here: Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26)
Trading Behaviour of Individual Traders in the Equity Derivatives Segment (FY25–FY26)