SEBI’s new studies show a retail trader’s odds improve almost perfectly with the size of his account. In April, the tax on losing went up again.
In brief
- 87.7% of individual derivatives traders lost money in FY26 – but the loss rate falls at every rung of capital, from 90.5% among those risking under ₹10,000 to about a third at the very top.
- 99% of what proprietary desks and foreign investors earned in the segment came from entities running algorithms.
- Securities transaction tax on options premium rose to 0.15% in April 2026 – the second increase in eighteen months, and one that landed after all of SEBI’s data was gathered.
At 2:40 on a Thursday afternoon, somewhere between a canteen queue and a lift lobby, a man buys a Nifty option that will stop existing at half past three. The screen offers him a green candle and a two-tap confirmation. It does not offer him the identity of whoever is selling.
Fifty minutes later, the contract is worth nothing.
SEBI has just published two studies on what happens to men like him, and the figure everyone has run with is that 87.7% of individual derivatives traders lost money last year. It is the wrong thing to be shocked by.
Nine in ten is roughly what difficult businesses look like from the outside. Barely a third of American firms born in 2013 were still trading ten years later, and nobody calls the restaurant trade a swindle. A brutal failure rate is what you get wherever the upside is large and the odds are honest about themselves.
What every one of those businesses has, though, is a gate. A lease. A licence. Staff who expect paying on the first. The gate isn’t paperwork – it’s the thing that quietly separates the serious from the curious before the money is at stake.
Futures and options have no gate. They have a KYC form and ₹10,000.
Which turns out to matter enormously, because the real finding buried in SEBI’s work isn’t the loss rate at all. It’s that the loss rate has a price.
The odds are priced in rupees
Share of individual traders who ended FY26 as loss-makers, by the largest margin they deployed all year.
The odds fall at every single step of capital. The way out of the loss column is not a better strategy – it is a bigger account.
Source: SEBI, Trading Behaviour of Individual Traders in the Equity Derivatives Segment (FY25-FY26), August 2026 – Table 6 and Chart 2. Random sample of about 5,000 traders; findings indicative. The top rung rests on 22 traders, of whom 8 lost money, and should be read with caution.
Sort traders by the capital they actually put up and the outcome sorts itself almost perfectly. Among those who never deployed more than ₹10,000 of margin, 90.5% lost. Climb the rungs and the number falls at every single step – 86% in the ₹1-5 lakh band, 68% between ₹10 lakh and a crore.
This isn’t one market that most people happen to lose in. It’s a market where the odds are set, more than by anything else, by how much you walked in with.
And 77% of India’s derivatives traders walk in with under ₹1 lakh.
The costs aren’t linear either. Brokerage on a derivatives order is typically a flat fee – the same twenty-odd rupees whether the position is trivial or enormous. Statutory levies scale with turnover; the charge sitting on top of them does not. So the smallest accounts, already stuck at the wrong end of that ladder, pay the steepest effective rate for the privilege of standing there. SEBI’s numbers show where it lands: transaction costs swallowed 35% of what loss-makers lost last year, against 21% of what the winners won.
And the levy inside that is rising. Securities transaction tax collected from these traders went from ₹1,291 crore in FY22 to ₹6,645 crore in FY26 – and then, in April this year, after every number above had been gathered, the Budget raised the rate again, from 0.10% of options premium to 0.15%. It had already been raised in October 2024. The activity SEBI keeps publishing warnings about is now taxed half again as heavily as in the year it measured.
Which raises the question of who is standing at the other end. Here the studies are blunt.
Where the money went
Individual traders gave up ₹1,70,125 crore gross across FY25 and FY26. Derivatives are close to zero-sum before costs, so one side’s loss is broadly another’s gain – and this is who booked it.
Proprietary desks and foreign investors booked four-fifths of it – and almost all of what they took was earned by machines.
Source: SEBI, Profitability of Individual Traders in the Equity Derivatives Segment (FY25-FY26), August 2026 – Chart 18. Squared-off gross realised P&L across FY25 and FY26 combined, before transaction costs, covering the entire trader population on BSE and NSE.
Across FY25 and FY26, individual traders gave up roughly ₹1.70 lakh crore gross. Proprietary desks collected about ₹90,000 crore of it; foreign portfolio investors, ₹45,000 crore. Ninety-nine per cent of what those two categories earned came from entities running algorithms – 372 of the 432 FPIs in the segment traded through machines. Among individuals the figure is 15%, and SEBI notes even that is flattered by brokers auto-squaring positions at 3:20.
The asymmetry isn’t only speed. It’s that one side can test an idea against a decade of tick data before a rupee is risked, and the other side has a hunch and a group chat.
Watch what happened this month. On 3 August the exchanges replaced the closing-price mechanism for F&O stocks with an auction. On day one the gap between where the Nifty traded at 3:15 and where it officially closed was 82 basis points – a dislocation nobody had seen before. Five sessions later it was 5.5. Somebody re-tooled inside a week.
It wasn’t the man with the phone.
The cross-current
The tax deserves more argument than it gets, because India is close to alone in charging it this way. Britain takes half a per cent on share transfers and nothing on derivatives; Hong Kong and Singapore leave exchange-traded derivatives alone entirely; America charges about a fifth of a basis point. The only other major market taxing the option premium itself is Taiwan.
Sweden tried it and published the results. When it extended its transaction tax to derivatives in January 1989, futures volume fell by around 98% and the options market effectively vanished. The tax was scrapped within fifteen months.
None of which tells you what to do at 2:40 on a Thursday.
But SEBI followed the traders who lost more than a crore between FY22 and FY24, and looked at what they were holding two years on. The median equity portfolio was ₹138.
Not lakh. One hundred and thirty-eight rupees – less than the option that started it.
The warnings are published. The odds are published. The machines are permitted, the levy is legislated, and it is going up. Nothing here is hidden, and nothing here is malfunctioning.
Which leaves a question a regulator’s study can’t settle, because it isn’t the regulator’s to settle: when the same activity is discouraged in one government document and taxed harder in another, which of the two is the policy?