SEBI FY26 F&O report: retail pullback, 88% lose in FY26

SEBI’s latest FY26 study on equity derivatives profitability has become a major talking point across Indian market forums. The discussion is not about a single stock, but about how India’s F&O market is evolving after years of retail-led growth. Social posts repeatedly highlight two themes from the regulator’s data. First, participation by individual traders fell year-on-year for the first time since FY16. Second, even with lower aggregate losses, the majority of individual traders still ended FY26 in the red.

What SEBI’s FY26 study puts on the table

SEBI’s FY26 derivatives study tracks participation and profitability in equity derivatives. It reports that nearly 88% of individual traders incurred losses in FY26. Net losses for individuals were reported at ₹91,685 crore in FY26. This was lower than FY25’s reported net loss of about ₹1.12 lakh crore. Online debate has focused on whether the decline reflects better outcomes or simply fewer traders. The same discussions also point to regulatory curbs and higher transaction costs as triggers for cooling participation. The data is being read as a reality check after a multi-year retail boom. It also sharpens the contrast between retail outcomes and professional trading entities.

Participation falls for the first time since FY16

The headline participation data shows a year-on-year decline in FY26. One widely shared figure is that individual participation in equity derivatives fell to around 87.5 lakh in FY26 from 106.2 lakh in FY25. Posts call this the first annual reduction in individual investors after nearly a decade of growth. Another data point cited from the same SEBI study pegs active individual F&O traders at 78.6 lakh in FY26 versus 98.1 lakh in FY25, a roughly 20% decline. Social media commentary often treats both as confirmation of the same direction of travel. It frames FY26 as a year when the retail trader base finally stopped expanding. It also notes that the pullback is concentrated largely in options, where most individuals trade.

New entrants slow, exits surge

The drop in participation is closely tied to fewer new entrants. New investors fell sharply to 20.8 lakh in FY26 from 34.3 lakh in FY25, as cited in multiple posts. Social discussions also highlight the longer trend line for new entrants peaking in FY24. New traders entering equity derivatives were cited at 4.31 million in FY24, then 3.43 million in FY25, and 2.08 million in FY26. At the same time, the number of exiting investors jumped to about 46 lakh in FY26. Several users describe this as a shift toward a market dominated by repeat traders. One post summarised it as a “historic retail retreat” with roughly 24.9 lakh net participants shed. The most consistent takeaway is that FY26 was not just slower growth, but a reversal.

Loss rates still high despite lower aggregate losses

Even with fewer participants, the loss rate stayed elevated. SEBI’s study found that about 87.7% of individual traders incurred losses in FY26. Social posts often simplify this as “nearly nine out of 10” losing money. The share of loss-making individuals was also said to have declined by 3.2 percentage points from 90.9% in FY25. Aggregate net losses for individuals fell to ₹91,685 crore in FY26 from about ₹1.12 lakh crore in FY25. Many commenters stress that this drop does not necessarily mean better performance per person. The same set of posts cite that average loss per trader rose marginally to about ₹1.17 lakh in FY26. In short, fewer traders participated, but losses remained widespread among those who stayed.

Options drive most retail losses

A repeated point in the SEBI data is the centrality of options. Around 92% of aggregate losses incurred by individuals arose from options trading in FY26. This is frequently mentioned in online threads debating “options buying” behaviour and risk. Discussion also notes that the pullback in participation was concentrated in options. Futures participation remained smaller in absolute terms, based on comments referencing the report. One widely shared statistic is that the share of traders who traded in the futures segment declined marginally to 6.6% from 6.7%. That means most individuals remained in options even as participation cooled. The data points are being used to argue that retail outcomes are largely being shaped by options activity. They are also used to question whether product design and trading habits are aligned.

Turnover concentrated near expiry and 0DTE

SEBI’s study also describes how concentrated index options trading is around expiry. About 59% of index options turnover occurred in contracts expiring on the same day, often referred to as 0DTE. Around 75% occurred within one day of expiry. About 97% happened within one week of expiry. Social posts cite these numbers as evidence of short-horizon trading dominating volumes. The same posts link this behaviour to the persistence of losses among individuals. They also connect it to the popularity of frequent, small-ticket bets. The figures are being discussed as a structural feature of India’s index options market. For many readers, this section of the report explains why outcomes can be so skewed.

Who made money: prop traders and foreign funds

Online discussion has also focused on profitability by participant category. One widely shared summary says proprietary traders recorded the highest gross trading profit at about ₹44,000 crore in FY26. Foreign funds were cited with gross profit of about ₹14,000 crore. Corporates were cited at about ₹8,000 crore, and mutual funds at about ₹3,000 crore, with partnership firms/LLPs also around ₹3,000 crore. On the loss side, gross trading loss of individual traders during FY26 was cited at about ₹72,000 crore. These gross figures are described as before transaction costs. Another post added that algorithmic entities accounted for 99% of the gross profits for foreign funds and prop traders. Together, FPIs and prop entities were cited as earning ₹58,379 crore in gross profits in one summary shared online. This contrast has driven debate about skill, speed, and cost advantages.

Transaction costs and their role in outcomes

SEBI’s report also quantifies transaction costs for individuals. It cited individual traders incurring transaction costs of around ₹25,000 crore during FY26. Over FY22 to FY26, cumulative transaction costs paid by individuals were cited at approximately ₹1 lakh crore. Posts discussing this point often separate “gross” outcomes from “net” outcomes. They note that net losses are what finally matter to traders. Some users interpret the data as a warning that frequent trading can amplify costs. Others treat it as evidence that outcomes cannot be judged only by hit rates on trades. The repeated reference in threads is that higher costs and regulatory curbs coincided with the first annual participation decline. This part of the report has become central to conversations about long-term sustainability of retail F&O activity.

What traders are debating online now

The most common debate is whether FY26’s lower aggregate losses are a meaningful improvement. Many commenters argue the decline mainly reflects fewer active participants, not better profitability. The rise in average loss per trader to about ₹1.17 lakh is used to support that view. Another major debate is the dominance of near-expiry index options, backed by the 0DTE and one-week concentration statistics. Threads also compare retail outcomes with prop and foreign fund profitability, especially the role of algos in generating 99% of their gross profits. Some users focus on the sharp fall in new entrants, from 34.3 lakh to 20.8 lakh, as a sign of moderation. Others focus on the exit count of nearly 46 lakh as the bigger story. Across discussions, the consistent conclusion is that FY26 marks an inflection point for India’s retail derivatives participation.