The latest numbers from the Securities and Exchange Board of India (SEBI) study are sobering. In the financial year 2024-25 (FY25), retail individual traders in the equity derivatives segment (futures & options, or F&O) lost ₹1.056 lakh crore, up 41% year-on-year from the previous year. Even more striking: roughly 91% of individual traders ended the year in the red.
At the same time, regulator statements make clear that a ban on weekly expiries isn’t on the table—at least not yet. Here’s a breakdown of what’s happening, why it matters, where things might head—and what retail traders should keep in mind.

The numbers: Losses balloon, participation falls

• According to SEBI’s study of ~96 lakh unique traders from 13 major brokers: losses in FY25 rose to about ₹1.05 lakh crore, compared to ~₹74,812 crore in FY24. 

• The loss-making rate remained around 91% for individual traders i.e., 9 out of 10 retail participants lost money.

• Unique retail trader participation declined: from ~61.4 lakh in Q1 FY25 to ~42.7 lakh in Q4.

• Turnover in index options fell 9% in premium terms and 29% in notional terms year-on-year. 

Interpretation: The F&O segment remains highly active, but for many retail participants it’s proving to be a money-losing game. The regulator’s recent measures may be cooling the participation somewhat, but losses continue unabated.

Regulatory backdrop: What SEBI has done & where it stands

The increasing losses and high risk in the F&O segment have prompted SEBI to act. Some of its responses include:

• In November 2024, measures to strengthen the equity derivatives framework were announced (e.g., limiting certain short-term contracts, increasing lot sizes, other risk-monitoring measures).

• In May 2025, additional risk-monitoring steps were introduced: better disclosures, tighter oversight of concentration/manipulation in index options.

• On the question of weekly F&O expiries (popular among traders because of short-tenure bets): SEBI chair Tuhin Kanta Pandey made it clear that an outright ban is not planned and that any reform will be “calibrated” rather than abrupt. 

In his words: “How can we shut down just like that?”  referring to weekly F&O contracts. 

So the message from the regulator: yes, we’re concerned; yes, we’re acting but we’re not flipping the switch overnight.

Why are retail traders losing so consistently?

Several reasons underpin the bleak retail outcomes in F&O:

• High leverage and short tenure: Many retail F&O trades are short-term bets (weekly, intraday), using leverage. This amplifies both gains and losses.

• Overwhelmingly unfavorable odds: With 9 out of 10 participants losing, the statistics suggest structural headwinds for retail.

• Market structure issues: The volumes in India’s derivatives market are huge and skewed; there is concern about institutional/proprietary trading, algorithmic players that may have an edge. For example, the case of Jane Street (see below) has raised questions.

• Short-term expiries and volatility: Weekly contracts and short-dated options increase the chance of being wrong even if you are directionally correct—you must be correct and timed correctly.

• Risk awareness perhaps lacking: Many retail participants may not fully appreciate the risks of F&O; the lure of quick profits may overshadow the probability of loss.
  
  

Why this matters  for markets, regulators and investors

• Market stability: A derivatives segment where a large part of the participants consistently lose is a concern for regulatory oversight, financial literacy, and systemic risk.

• Regulatory reputation: SEBI needs to ensure that the F&O market remains vibrant but fair. Over - expansion of speculative activity can undermine confidence.

• Retail investor protection: If the majority of retail participants are losing, regulators and brokers must ensure adequate disclosures, suitability, risk warnings and perhaps higher barriers for the segment.

• Structural reform signal: The comment about weekly contracts signals SEBI may be gearing up for reforms. Market participants should take note - changes may come, not overnight but in planned phases.

• Investor behavior: For retail investors (like many of your followers at @InvestWhatin) this is a wake-up call. Trading F&O is not the same as investing in shares; risk/return profile is different.
  
  

What to watch for going forward

Here are some key indicators and potential regulatory moves to monitor:

• SEBI consultation papers / draft circulars: The chair has indicated more steps ahead. The market will watch for consultation documents on contract tenures, lot sizes, margin rules.

• Change in weekly expiry structure: While a ban is ruled out, tweaking of weekly contracts (eligibility, margins, turnover limits) is possible.

• Turnover and participation trends in F&O: If retail participation declines further or turnover shifts to longer-dated contracts, that will show impact of policy.

• Broker disclosures and margin rules: Broader risk disclosures for retail clients, and changes in how brokers on-board derivatives traders may follow.

• Institutional/proprietary trading regulation: Given concerns about manipulation (Jane Street etc.), increased scrutiny on large derivative positions and algorithmic strategies may emerge.

• Retail education / awareness campaigns: SEBI and brokers may beef up investor education given the persistently high loss rates.
  
  

For retail/trader-readers: Practical take-aways

If you’re a retail trader or thinking of entering F&O, consider these points:

• Recognise the high risk: With ~91% of participants losing, you must assume that trading F&O is not a sure path to quick profits.

• Understand your time horizon and cost: Shorter-dated contracts (e.g., weekly) require not just direction but timing.

• Use risk management: Stop-losses, position sizing, limiting leverage these matter much more in derivatives than cash markets.

• Prefer longer-dated exposure if you are less active or less comfortable with rapid movements. SEBI officials have suggested longer-dated contracts may reduce volatility.

• Stay abreast of regulatory changes: Because rules can shift (contract tenures, margins, participation criteria), staying updated is part of trading discipline.

• Consider if you should trade or invest: If you are more comfortable with longer-term investing rather than active trading, maybe F&O is not the right vehicle.
  
  

Conclusion

The data from SEBI shines a glaring spotlight on the sobering reality of India’s F&O segment: retail traders are overwhelmingly on the losing side. While the regulator is taking steps to rein in risk and speculation, it has not opted for a blunt instrument like banning weekly expiries instead favoring a calibrated, consultative approach. For retail investors and traders, the message is clear: proceed with caution, fully understand the risks, and treat F&O trading differently from share investing.