SEBI Study Reveals Retail Traders Lost Over ₹1 Lakh Crore in FY25 from Derivatives Trading

In a stark reminder of the high risks embedded in derivatives trading, a fresh study released by the Securities and Exchange Board of India (SEBI) has revealed that retail traders lost a staggering ₹1.02 lakh crore through equity derivatives in FY25.

The study, which examined over 19 crore trades placed by 26.5 lakh unique retail traders, paints a sobering picture of participation in India's fast-growing F&O (futures and options) segment. The overwhelming takeaway: while access to markets has broadened, so too has the exposure to risk — and losses.

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A Market of Many, Gains for a Few

According to the data, 84% of the traders ended FY25 with net losses. Only 16% of individual participants were able to generate profits over the same period.

The average loss per trader stood at ₹1.1 lakh, while profitable traders booked an average gain of ₹2.1 lakh — underlining the skew in outcomes. These figures highlight how a small fraction of participants manage to extract gains, while the majority struggle to stay afloat.

Interestingly, while profits were concentrated, losses were more widely dispersed. This reinforces concerns that retail participants often enter derivatives trading without adequate preparation, capital, or risk mitigation frameworks.

Volume Isn’t Always Victory

The total trading turnover by these retail clients ran into trillions of rupees, yet the scale of participation didn’t translate into profitability. In fact, the study points to an unsettling trend — increased trading activity doesn’t necessarily equate to better outcomes. Many high-frequency traders, despite executing large numbers of trades, consistently incurred losses.

This dynamic has caught the attention of both the regulator and industry observers, especially given the post-COVID surge in retail trading accounts and increased adoption of mobile-based investing platforms.

The Cost of Leverage and Speed

The study notes that index options accounted for nearly 95% of the overall volume in equity derivatives by retail traders. These contracts, often preferred due to their low upfront costs and potential for large gains, also carry the burden of extremely high leverage — and equally high risk.

SEBI's data suggests that a significant portion of these losses stemmed from trading on expiry days, where volatility is amplified and outcomes can turn swiftly. Without proper hedging or defined strategies, many retail traders were unable to contain downside risk.

What Comes Next?

SEBI has not issued a policy statement along with the findings, but the implications are clear: better investor awareness, tighter checks on leveraged products, and continued scrutiny of derivatives participation trends are likely on the horizon.

Brokerages and platforms may also face pressure to improve onboarding disclosures, expand education initiatives, and encourage prudent trading practices — especially as retail remains a powerful force in India’s capital markets.

For now, the message is simple but urgent: while derivatives offer the promise of quick gains, they’re not a shortcut to wealth — and without skill, discipline, and preparation, the price can be steep.