A new SEBI study reveals that individual traders in India’s derivatives market incurred net losses of ₹91,685 crore during FY26. While the total loss figure is lower than the previous year, this decline is driven by fewer people participating rather than improved trading performance. Options trading continues to be the primary cause of these losses, with professional algorithmic traders capturing the bulk of the profit.
A recent study by the Securities and Exchange Board of India (SEBI) has highlighted the financial challenges faced by retail investors in the equity derivatives segment during the 2026 fiscal year. Individual traders incurred aggregate net losses of ₹91,685 crore, underscoring the risks associated with highly leveraged trading instruments.
According to the data, 87.7% of individual traders who participated in the derivatives market ended the year with a net loss. The study identified options trading as the single largest contributor to this negative outcome, accounting for approximately 92% of the total losses. Many retail participants are drawn to options due to lower entry requirements, but the high probability of these contracts expiring worthless often leads to substantial cumulative capital erosion.
The research also points to a significant disparity between retail investors and professional entities. Proprietary traders and Foreign Portfolio Investors (FPIs), who primarily deploy high-speed algorithmic strategies, captured the vast majority of the trading profits. These professional desks operate with technological advantages, allowing them to capitalize on the price movements and premium collections that lead to retail losses.
While the total loss figure of ₹91,685 crore is an 18% decline from the ₹1.12 lakh crore recorded in FY25, the data indicates that this improvement is not due to better trading outcomes. Instead, it reflects a 20% reduction in the number of active retail traders, which fell to 78.6 lakh in FY26, alongside a 40% drop in new entrants. This suggests that fewer people are trading, but those who remain are still facing high failure rates.
For investors, these findings emphasize the high-risk nature of the derivatives market. The cumulative impact of transaction costs and taxes, which totaled approximately ₹25,000 crore for individual traders in FY26, further complicates the path to profitability. The data highlights that the average loss per loss-making trader stood at approximately ₹1.17 lakh, representing a significant financial blow to many individuals, particularly those from lower-income brackets or younger demographics.
Market participants often monitor these SEBI reports to understand the evolving landscape of retail participation and the concentration of risk within the financial system. The persistence of these losses highlights the structural challenges individual investors face when competing against sophisticated algorithmic systems in a zero-sum trading environment.