Young investors are increasingly entering the futures and options - F&O market, but most of them are struggling to make any profits, according to a recent SEBI study. Traders under 30 now account for 43% of all individual traders in FY2025-26, up sharply from 31% in FY22, highlighting their growing dominance in participation within the highly volatile equity derivatives segment.

Key Highlights

• 89% of traders under 30 lost money in F&O trading during FY26, SEBI study reveals.
• Young traders faced significant losses as participation in India’s derivatives market continued to rise.

However, this growing participation has come with a higher incidence of losses. About 89% of traders under 30 incurred losses in FY26, compared with 81% of traders above 60 - making the youngest cohort the one with the highest proportion of loss-making traders.

Most Loss-Making Traders Come from Low-Income Groups

Trading activity data shared by the market regulator also showed that low-income traders have remained particularly active in the derivatives market, trading at an intensity of 75 times their portfolio value.

About three-fourths of individual derivatives traders have an annual income below Rs 5 lakh. In the previous financial year, this group accounted for 43% of overall turnover but 53% of aggregate losses - a share of losses ten percentage points higher than their share of trading activity.

The share of loss-makers was highest among traders earning less than Rs 10 lakh a year, particularly within the lower and medium capital-employed categories, where close to 90% of traders incurred losses.

Aggregate Losses Fell, But Average Loss Per Trader Rose

Individual traders aggregate net losses from stock market trading declined about 18%, from Rs 1,11,788 crore in FY25 to Rs 91,685 crore in FY26 - marking the first annual decline in aggregate losses recorded between FY22 and FY26.

However, the overall picture remained concerning, with individual traders accumulating nearly Rs 3.85 lakh crore in net losses over the five-year period. Moreover, the average loss per trader increased from around Rs 1.14 lakh in FY25 to Rs 1.17 lakh in FY26, suggesting that even as total losses declined, those who lost money continued to take a significant financial hit.

F&O Trading Drives the Majority of Losses

The biggest takeaway from the study is the dominant role of equity derivatives trading in driving retail losses. Options continued to account for the majority of losses among individual traders in FY26, making up 92% of their aggregate losses.

The study noted that the high incidence of retail losses observed in India is consistent with global evidence, with around two-thirds to nine in ten retail participants in several derivatives and leveraged-product markets worldwide incurring losses.

The proportion of loss-makers was also far higher among options traders than futures traders. About 87.7% of individual options traders lost money, compared with around 66% of futures traders.

Also Read: Women Investors Drive Rs 11.3 Trn MF AUM Growth in FY26: CAMS Report

Derivatives Trading Expands Beyond Top Cities

Derivatives trading activity is no longer limited to India's top-30 cities, which include New Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Pune, Hyderabad and Ahmedabad, among others.

Beyond these cities, investors made up about two-thirds of individual traders and nearly half of derivatives turnover in FY26 - even though this segment accounts for only about one-fourth of individual mutual fund assets, pointing to a markedly higher derivatives risk appetite relative to their broader investment behaviour.

Why Options Trading Remains Particularly Risky

The data showed that retail trading in index options remains heavily concentrated in very short-duration contracts. In FY25, 70% of turnover occurred on the expiry day itself ("0DTE"), 80% within one day of expiry ("1DTE"), and 98% within one week of expiry ("7DTE").

Following the introduction of measures by SEBI, these proportions moderated to 59%, 75% and 97%, respectively, in FY26, indicating a modest shift away from very near-expiry contracts.

Longer-dated contracts accounted for only a negligible share of overall trading, with just 3% of turnover occurring in contracts with more than seven days to expiry, and only 1% in contracts with more than ten days to expiry. The data suggests that even though expiry-day concentration moderated following SEBI's measures, retail trading activity remains overwhelmingly focused on contracts with very short time to maturity.