SEBI study: 88% F&O traders lost money in FY26

Why the SEBI F&O profitability study is trending

SEBI has released a study titled “Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26)”. The study looks at individual participation, profitability, transaction costs, and loss outcomes in India’s equity derivatives segment. Social media discussion has focused on a simple takeaway that roughly 9 out of 10 individual traders lose money. The new release is also being compared with SEBI’s earlier work that analysed profitability over multiple years, including FY22 to FY24. A second theme in online commentary is that reported “profitable” counts can hide how small many profits are after costs. Another recurring point is that losses are not evenly distributed and are heavier among smaller traders. People are also debating whether regulatory tightening reduced harm, because participation fell and aggregate losses declined in FY26. SEBI’s dataset is a key reason the discussion has traction, because it is based on client-level and transaction-level data covering about 90% of individual traders.

FY26 snapshot: participation down, losses still large

SEBI reported that participation of individual traders declined by 18% to 87.5 lakh in FY26. Even with lower participation, SEBI said 87.7% of individual traders incurred net losses in FY26. SEBI also reported aggregate net losses declined by about 18% to ₹91,685 crore in FY26. The loss rate improved versus FY25, when SEBI reported 90.9% of individual traders made net losses. However, the average loss per person in FY26 increased to about ₹1.17 lakh from ₹1.13 lakh in FY25, as cited in social and media summaries of the report. This combination - fewer participants and lower total losses, but slightly higher average loss - has been widely discussed. SEBI also noted the pullback in participation was sharpest among smaller traders, a detail that social posts have connected to the higher loss burden on small accounts. The FY26 findings are being positioned as an “improvement” on the headline loss rate, but not necessarily on the experience of the typical losing trader.

Options drove most losses, per SEBI

One of the clearest FY26 findings shared from the SEBI study is that 92% of aggregate losses arose from options trading. This has become a focal point because it links the largest losses to the most popular retail derivatives product. The study is specifically about the equity derivatives segment, which includes options and futures, and the social discussion often uses “F&O” as shorthand. When most losses are concentrated in options, it raises questions about how individuals are using options - for hedging versus short-term speculation. It also matters for interpreting any decline in participation, because a drop in speculative options activity could reduce aggregate losses without changing win rates much. SEBI’s numbers also reinforce a broader pattern cited in online threads that profitability is difficult for individuals after costs and slippage. Many commentators have highlighted that this is not a one-off year, because SEBI has published multiple studies with similar outcomes. The FY26 options loss share adds product-level clarity to the broader “most traders lose” headline. It also explains why discussions of guardrails and disclosures in options trading keep resurfacing.

Average loss vs average profit: asymmetry

A key data point circulated from the FY25–FY26 study is the gap between typical losses and typical gains. As summarised from the report, the average loss among loss-makers was about ₹1.47 lakh in FY26. The average profit among profit-makers was about ₹1.22 lakh, implying the typical loss was around 21% higher than the typical gain. This asymmetry matters because even if a minority of traders are profitable, the payoff distribution is still unfavourable for most participants. It also helps explain why year-level statistics can look deceptively close, such as “87.7% lost” versus “12.3% did not lose”, while the rupee outcomes are far apart. Another SEBI-related discussion point is that a trader who makes even a very small profit can be counted as “profitable” in annual figures. Social posts argue that the key question is not just profitability, but whether profits meaningfully exceed the costs and risk taken. That is why people are comparing average outcomes and not just the percentage of winners. The FY26 averages shared in the discourse support the view that the median experience is negative and difficult to overcome with short-term trading.

Who lost more: smaller portfolios, no equity holdings

The SEBI study summaries shared online highlight that losses were heavier among smaller investors. One cited finding is that about 35% of individual derivatives traders had no equity holdings. Another is that nearly 78% had equity portfolios below ₹1 lakh. SEBI also said traders with equity portfolios below ₹1 lakh accounted for about 70% of aggregate losses despite contributing about half of turnover. This point is often interpreted as smaller accounts taking relatively higher risk or paying proportionally higher costs. SEBI further noted that 93% of traders with no equity holding made losses, compared with 58% of traders holding more than ₹10 crore in equity portfolios. The contrast has been used to argue that experience, capital buffers, and risk management may differ sharply across cohorts. It also ties into concerns about suitability and whether derivatives are being used by people without an underlying investing base. Social commentary connects this to the idea that many participants approach derivatives as a primary activity rather than as a hedge. The distributional aspect is central to the debate because it suggests the harm is concentrated among smaller accounts.

What costs do to outcomes: transaction charges focus

Another set of figures referenced in social discussion comes from SEBI’s multi-year analysis, which explicitly highlighted the role of transaction costs. Over the FY22 to FY24 period discussed in posts, transaction costs such as brokerage, STT, GST, exchange charges, and stamp duty were said to account for 28% of total losses incurred by individual traders. This cost share is frequently cited because it is structural, meaning it applies regardless of market direction. It also explains why a strategy with a modest edge can still end up net negative once costs are applied. In online debates, this is often linked to high-frequency behaviour among individuals, where turnover increases cost drag. Another implication is that “gross profitable” trading can look better than “net profitable” trading, which is what SEBI reports after accounting for costs. Cost drag is also relevant to comparisons between individuals and institutional or professional participants, because different categories may have different execution and infrastructure. Some posts contrast individual outcomes with reported profits by proprietary traders and FPIs in FY24, attributed in part to algorithmic trading. While the SEBI study focuses on individuals, the cost narrative shapes how readers interpret the gap in outcomes across participant types.

The two-year view: profits often small in rupees

A widely shared SEBI statistic from an earlier report (published in 2024) is that over a two-year period, about 7% of traders were profitable out of a sample of 1.13 crore traders. Within those profit-makers, around 6.4 lakh reportedly booked profits of less than ₹10,000 per month, which was described as about 80% of all profitable traders in that two-year sample. This is the origin of a common social media claim that even when individuals “win”, the win is often small in absolute rupees. Using only the figures provided, it implies that the set of traders earning more than ₹10,000 per month was a small minority of the overall population. The same online threads also cite that only 1% of traders earned profits above ₹1 lakh per year after accounting for transaction costs in the multi-year view. Separately, SEBI’s multi-year findings shared in posts say 93% of individual traders lost money across FY22 to FY24, with aggregate losses exceeding ₹1.8 lakh crore. These cross-year comparisons are used to argue that the core conclusion has been consistent across different time windows. They also explain why discussions increasingly focus on rupee outcomes, not just win rates.

What the data suggests for retail traders and policy debate

The most grounded takeaway from the SEBI material being discussed is that loss rates remain very high even after participation moderated in FY26. The FY26 decline in aggregate losses and participation is being read by some as evidence that regulatory tightening and reduced speculative activity can lower overall damage. At the same time, the rise in average loss per trader and the strong role of options in losses suggest risk remains concentrated among active participants. The cohort breakdowns highlighted in posts point to a suitability issue, with higher loss rates among those with small or no equity holdings. Another important point from the SEBI summaries is persistence, where traders who lost money for two straight years and continued trading saw around 90% lose money again the next year. That persistence challenges the idea that time in the market alone will fix outcomes for most individuals. Social media also repeatedly points out that distribution matters, including the cited statistic that the top 3.5% of loss-makers suffered very large average losses over the three-year period. In parallel, the small share of people earning meaningful profits after costs keeps the focus on realistic expectations. The overall debate is less about whether trading is possible, and more about how rare sustained net profitability appears to be for individuals in these datasets.