SEBI’s latest study on equity derivatives has put a stark number on the risks faced by individual futures and options traders: 87.7% of individual traders incurred net losses in FY26, even as aggregate net losses fell 18% to Rs 91,685 crore from Rs 1,11,788 crore in FY25.
The number of active individual traders also fell sharply, declining 18% to 87.5 lakh from 1.06 crore. Yet options continued to dominate the segment. SEBI found that 99.3% of individual traders traded options at least once, while 93% traded only options.
SEBI study reveals FY26 F&O losses 18% less than FY25 but still large
SEBI released its study, Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26), on August 20. The regulator said the study examines profitability, participation, transaction costs and loss outcomes among individual traders and is based on client-level and transaction-level data covering approximately 90% of individual traders in the segment.
SEBI said in its public communication: “SEBI has released a study on ‘Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26)’.”
The regulator added: “The study examines profitability, participation, transaction costs and loss outcomes of individual traders in the equity derivatives segment.”
The numbers show that FY26 was not simply a year in which individual trading losses declined. Participation itself contracted, fewer new traders entered the segment, more existing traders exited and options remained the dominant product.
Individual trader base falls as exits surge
Active individual traders fell to 87.5 lakh from 1.06 crore, marking an 18% decline in FY26. The fall was accompanied by a sharp drop in new participation.
New trader entries declined 40% to 20.8 lakh from 34.3 lakh, while existing trader exits increased 76% to 46 lakh from 26 lakh.
The result was a substantially smaller individual trader population in equity derivatives by the end of FY26.
Overall equity derivatives traded turnover also declined 9% to Rs 585 lakh crore from Rs 641 lakh crore. Futures turnover fell 15% to Rs 394 lakh crore from Rs 463 lakh crore, while options premium turnover increased 7% to Rs 191 lakh crore from Rs 178 lakh crore.
| Parameter | FY25 | FY26 | Change |
| Active individual traders | 1.06 crore | 87.5 lakh | -18% |
| New trader entries | 34.3 lakh | 20.8 lakh | -40% |
| Existing trader exits | 26 lakh | 46 lakh | +76% |
| Futures turnover | Rs 463 lakh crore | Rs 394 lakh crore | -15% |
| Options premium turnover | Rs 178 lakh crore | Rs 191 lakh crore | +7% |
| Equity derivatives turnover | Rs 641 lakh crore | Rs 585 lakh crore | -9% |
Source: SEBI study, Profitability of Individual Traders in the Equity Derivatives Segment, FY25-FY26.
Losses fall, but almost nine in 10 traders remain loss-makers
Individual traders’ gross trading loss narrowed 26% to Rs 72,243 crore from Rs 97,882 crore in FY25.
The share of loss-making traders also improved, falling to 87.7% from 90.9%, a reduction of 3.2 percentage points.
But the average loss among those who lost money increased. It rose 2% to Rs 1.17 lakh from Rs 1.14 lakh.
That distinction makes the FY26 picture less comforting. Aggregate losses were lower partly because the number of active traders fell substantially. The traders who remained active still faced a very high incidence of losses, and the average loss among those who lost money moved higher.
Options account for 92% of aggregate losses
Options were by far the preferred product among individual traders.
SEBI found that 99.3% of individual traders traded options at least once, while only 6.6% traded futures. Further, 93% traded only options, with less than 1% trading only futures.
The loss concentration is even more striking.
SEBI said: “92% of aggregate losses arose from options trading.”
The turnover data supports the same conclusion. Futures turnover fell 15% in FY26, whereas options premium turnover increased 7%.
This means the contraction in individual derivatives activity was not spread evenly across products. Futures participation and turnover fell, but options continued to draw the overwhelming majority of individual traders.
Younger traders make up a larger share, but losses remain high
The study also points to a pronounced age divide.
Traders below 30 years accounted for 43% of individual traders in FY26, up from 31% in FY22.
However, the proportion of loss-makers was higher among younger traders. 89% of traders below 30 were loss-makers, compared with 81% among traders above 60.
The figures show that younger participants have become a much larger part of the individual derivatives market over the period covered by the study. They have also recorded a higher incidence of losses.
The age data becomes particularly significant when viewed alongside the dominance of options. The product most widely used by individual traders is also the product responsible for 92% of aggregate losses.
Lower-income traders account for three-fourths of participants
Income data provides another sharp distinction.
Traders in the below-Rs 5 lakh income category accounted for 75% of individual traders. This group accounted for 53% of losses and 43% of turnover.
The loss rate was also high. 88% of traders in the below-Rs 5 lakh income category were loss-makers, compared with 81% among traders with income above Rs 1 crore.
SEBI has cautioned that this income analysis is based on declared income and that FY26 findings cover 55% of individual traders because of limited data availability.
Even with that limitation, the available data shows a large concentration of derivatives participation among lower-income traders, alongside a high rate of loss-making activity.
B30 cities account for around two-thirds of individual traders
The geographical spread of derivatives trading has also widened beyond the largest financial centres.
Around 66% of individual traders came from B30 cities, while these cities accounted for roughly 50% of derivatives turnover.
The study compares this with mutual funds, where B30 cities account for around 25% of mutual fund assets.
The difference shows that derivatives participation outside the biggest financial centres is considerably higher relative to the size of the mutual fund base in those locations.
SEBI’s demographic data therefore points to three distinct characteristics of the individual derivatives market: a growing share of younger traders, a large base of lower-income participants and strong participation from B30 cities.
Proprietary traders remain the biggest profit pool
The picture is sharply different for non-individual participants.
Proprietary traders generated Rs 44,483 crore of gross profit in FY26, the highest among the categories covered by the SEBI study. Their gross profit declined only 3% from Rs 45,955 crore in FY25.
Foreign portfolio investors saw gross profit fall 55% to Rs 13,896 crore from Rs 31,085 crore. Corporate gross profit declined 22% to Rs 8,092 crore from Rs 10,392 crore.
Mutual funds recorded gross profit of Rs 2,595 crore, down 54% from Rs 5,613 crore. Partnership firms and LLPs generated Rs 2,953 crore, down from Rs 4,737 crore.
DIIs excluding mutual funds were an exception, with gross profit rising 123% to Rs 225 crore from Rs 101 crore.
| Category | FY25 gross profit | FY26 gross profit |
| Proprietary traders | Rs 45,955 crore | Rs 44,483 crore |
| FPIs | Rs 31,085 crore | Rs 13,896 crore |
| Corporates | Rs 10,392 crore | Rs 8,092 crore |
| Mutual funds | Rs 5,613 crore | Rs 2,595 crore |
| Partnership firms/LLPs | Rs 4,737 crore | Rs 2,953 crore |
| DIIs* | Rs 101 crore | Rs 225 crore |
DII excludes mutual funds. Source: SEBI study.
Algo trading accounts for almost all FPI and proprietary profits
SEBI’s study also shows a sharp difference in the way institutional and proprietary participants generate profits.
The study found that 99% of FPI and proprietary profits came from algo entities.
Profitability was also highly concentrated among proprietary traders. 75% of proprietary profits were earned by the top 10 entities, which accounted for 85% of options activity and 65% of futures activity.
The contrast with individual traders is significant. The individual segment has millions of participants, but the overwhelming majority lose money. Proprietary trading profits, meanwhile, are concentrated among a small group of entities with substantial algorithmic activity.
FY26 shows a smaller retail market, but not a safer one
The overall FY26 data presents a mixed picture.
The number of active individual traders fell 18%. New trader entries fell 40%, while existing exits rose 76%. Aggregate net losses declined 18%, and the proportion of loss-making traders fell from 90.9% to 87.7%.
But the average loss among loss-makers increased 2%. Options remained overwhelmingly dominant, with 93% of individual traders trading only options, while 92% of aggregate losses came from options.
SEBI’s study is based on client-level and transaction-level data and covers approximately 90% of individual traders in the equity derivatives segment.
SEBI’s public communication captures the central finding in simple terms: “Participation of individual traders declined by 18% to 87.5 lakh in FY26.”
It also states: “Aggregate net losses declined by about 18% to Rs 91,685 crore in FY26.”
And the regulator’s final key finding is equally significant: “92% of aggregate losses arose from options trading.”
Conclusion
The SEBI data therefore points to a market where individual participation is contracting, but options remain deeply entrenched and the risk of loss remains exceptionally high among those who continue to trade.
Disclaimer: This article is based on the Securities and Exchange Board of India’s study, Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26), released on August 20, 2026, and SEBI’s accompanying public communication and study graphics. The figures, findings and statements attributed to SEBI are presented for informational and journalistic purposes. This article does not constitute investment advice, a recommendation to trade in futures or options, or a solicitation to buy or sell any security. Derivatives trading involves substantial risk. Readers should independently assess their financial circumstances and risk tolerance and consult a SEBI-registered investment adviser where appropriate before making investment decisions. Past performance is not indicative of future results.