Retail participation in the futures and options (F&O) segment remains fraught with significant financial risks, with a new SEBI study finding that nearly 90% of traders who exclusively bought options incurred losses in FY26.
However, while options buyers had a higher likelihood of losing money, sellers faced substantially steeper losses when their bets went against them.
According to the study released by the Securities and Exchange Board of India (SEBI) on Thursday, 93% of retail traders in the options segment were classified as “only-options buyers”.
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Nearly nine out of 10 such traders incurred losses during FY26.
The average loss for these traders stood at around Rs 1.28 lakh, while their median Return on Capital Employed (RoCE) was sharply negative at minus 114%.
In contrast, traders classified as “majorly-options sellers” recorded the lowest loss incidence among the categories studied, at 43.8%.
However, the relatively lower probability of losing did not shield sellers from substantial downside risk.
For options sellers who ended up making losses, the average loss stood at a staggering Rs 51.7 lakh, according to the SEBI study. This was more than 11 times the average loss suffered by options buyers.
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The findings highlight the contrasting risk profiles of options strategies.
While buying options carries a higher probability of losses due to factors such as time decay, selling options can expose traders to significantly larger losses when markets move sharply against their positions.
The study reflects the need for retail investors to understand the risks involved in leveraged F&O trading rather than viewing options as a quick route to profits.
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