SEBI Data: 88% of F&O Traders Under 30 Lost Money in FY26

What SEBI's latest study found

In the past week, the Securities and Exchange Board of India released its newest annual study on individual trader profitability in the equity derivatives — futures and options, or F&O — segment, covering the financial year ended March 2026. The headline number sounds like progress: aggregate net losses of individual traders fell 18 per cent to Rs 91,685 crore in FY26, down from Rs 1.12 lakh crore in FY25. But sit with the underlying numbers a little longer and the picture turns considerably less comforting.

Roughly 87.7 per cent of individual traders in the segment still ended the year with a net loss. The average loss per losing trader actually rose, by about 2.4 per cent, to approximately Rs 1.17 lakh. Fewer people traded — the number of active individual traders fell around 18 per cent to 87.5 lakh in FY26 from 106.2 lakh in FY25, the first year-on-year decline in this segment since FY16 — but the ones who stayed did not fare meaningfully better. Over the five years from FY22 to FY26, individual traders have cumulatively lost close to Rs 3.85 lakh crore in this one segment of the market.

SEBI built this analysis on client-level data from the top 15 brokers, who together account for roughly 90 per cent of individual investors in equity derivatives. That is a large, representative sample, not an anecdote or a survey — which is what makes the findings hard to wave away as noise from a few unlucky quarters.

Why the young and the low-income are the biggest losers

Two details in the study stand out because they cut against the common assumption that market-savvy young Indians are trading their way to wealth.

First, age. Traders under 30 now make up 43 per cent of the individual trader base in FY26, up sharply from 31 per cent a few years earlier. Among this group, close to 88.5 to 89 per cent lost money in FY26 — the highest loss rate of any age bracket, higher even than the 81 per cent loss rate among traders above 60. In other words, the demographic entering this market fastest is also the one losing most consistently.

Second, income. Nearly three-fourths of individual derivatives traders reported annual incomes below Rs 5 lakh. This group generated 43 per cent of total trading turnover but absorbed 53 per cent of total losses — a disproportionate share of the pain relative to their share of activity. SEBI also noted that low-income traders traded with striking intensity, turning over positions worth roughly 75 times their portfolio value over the year. That is not casual dabbling; it is leveraged, high-frequency exposure taken on by people with comparatively little financial cushion to absorb a bad month.

Retail participation has also spread well beyond India's metros. Investors outside the top 30 cities now account for roughly two-thirds of individual traders and close to half of derivatives turnover, a pattern that has been building for several years as smartphone-based trading apps reached smaller towns.

Where the losses actually come from

The study points to a fairly narrow source of pain: equity options. Options trading accounted for around 92 per cent of individual traders' aggregate losses in FY26. Among traders who dealt only in options, close to 88 per cent lost money, compared with about 66 per cent among those trading futures — a meaningfully lower, though still poor, hit rate. On top of the trading losses themselves, transaction costs — brokerage, exchange charges, securities transaction tax, stamp duty and GST — consumed a further sum estimated at around Rs 25,000 crore, a cost that is paid regardless of whether the underlying trade wins or loses.

The study also flagged a specific behavioural pattern that regulators have been trying to discourage since late 2024: extremely short-duration, expiry-day speculation. Despite SEBI's earlier moves to rationalise weekly index contracts and reduce the number of expiries, 59 per cent of index-options turnover in FY26 still occurred on the expiry day itself, and 75 per cent was concentrated within a single day of expiry. This is the trading equivalent of buying a lottery ticket that expires in hours — contracts whose value can swing wildly, and often collapse to zero, within the same session.

Why this matters beyond the derivatives desk

It would be easy to read this as a story only about people who trade options — a niche activity, surely, compared to mutual fund investing or long-term equity holding. But two things make it relevant to a much wider audience.

One is scale. SEBI's regulatory interventions since November 2024 — including higher contract sizes, upfront collection of option premiums, and tighter position monitoring — have measurably reduced participation and losses. Aggregate net losses fell from Rs 1.12 lakh crore to Rs 91,685 crore, and unique retail participants fell from 98.1 lakh to 78.6 lakh by one measure. That is a policy success in the narrow sense that fewer people are being drawn in and losses are shrinking in total. Yet the persistence of a roughly 88 per cent loss rate among those who remain suggests the underlying behavioural pull — the belief that a few quick, well-timed trades can outrun the slow grind of saving and investing — has not gone away. Regulation can raise the cost of entry; it cannot, on its own, change how people think about risk.

The second is the overlap of audiences. Many of the young, first-time market participants drawn into weekly options are the same cohort that mutual fund distributors and financial educators are trying to reach with messages about SIPs, long-term compounding and goal-based investing. A 24-year-old who has just lost Rs 1.17 lakh chasing a Nifty expiry-day trade is, statistically, a plausible person to also be running — or considering starting — an equity mutual fund SIP. The two behaviours, speculation and long-term investing, often coexist in the same household, sometimes in the same bank account, and they operate on entirely different logics: one is a zero-sum wager against other traders and market-makers over hours or days; the other relies on broad economic growth compounding over years and decades.

What the numbers do not settle

There is genuine debate about how much further regulation should go. Some market participants argue that retail investors have a right to access derivatives markets and that continued tightening simply pushes speculative activity into less regulated or offshore platforms. SEBI's own approach so far has been to preserve access while raising disclosure and cost barriers — higher lot sizes, upfront premium collection, tighter expiry-day risk controls — rather than banning retail participation outright. Whether that calibration is the right one, and whether further measures are needed, remains an open policy question that SEBI, brokers and investor bodies continue to debate.

What the data does establish, with reasonable confidence given the size and coverage of the underlying broker sample, is the pattern itself: a large majority of individual traders in this segment lose money in a given year, the losses are concentrated in short-dated options, and the demographic most exposed — young, lower-income, first-time market participants — is also the fastest-growing part of the base. For anyone reading this data as an outside observer of their own household's finances, the useful exercise is simply distinguishing, in one's own portfolio, what is speculation and what is investing, and being honest about which bucket a given rupee is sitting in.