Why 91% of Option Traders in India Lost Money in FY25

What SEBI’s FY25 study actually found

In July 2025, the Securities and Exchange Board of India (SEBI) published a follow-up to its landmark January 2023 study on individual trader outcomes in the equity Futures and Options (F&O) segment. The update, covering financial year 2024–25, confirmed that the problem hadn’t gone away – it had gotten worse.

91% of individual traders in India’s equity derivatives market lost money during FY24–25. Net losses for individual traders widened by 41% compared to the previous year, rising to roughly ₹1.06 lakh crore in FY25 from around ₹74,812 crore in FY24, after accounting for transaction costs. Since the regulator began tracking this in 2021–22, cumulative net losses for individual F&O traders now exceed ₹2.8 lakh crore.

This isn’t a one-off bad year. SEBI’s original 2023 study found 89% of individual traders lost money in FY22. A follow-up covering FY22–FY24 found the number had risen to 93%. The FY25 figure of 91% sits right in that same range – this is a structural pattern in how retail F&O trading plays out in India, not a temporary dip.

The numbers, year over year

What makes the FY25 update notable isn’t just the percentage of losing traders – it’s that the size of the losses grew even as SEBI introduced fresh safeguards through 2024 and 2025, including tighter position limits and streamlined expiry days.

A few details from the data are worth sitting with:

• The number of unique individual F&O traders actually fell by around 20% year-on-year in the second half of FY25 – fewer people are trading, but those who remain are losing more, not less.
• Younger traders (20–30 years old) have grown from roughly 31% to 43% of participants in recent years, and this group loses money at rates similar to the overall population.
• Index options turnover has declined in premium terms year-on-year, but remains well above levels from two years earlier – the appetite for high-risk, high-frequency options trading hasn’t gone away, even as the losses mount.

Who’s on the other side of these trades?

Options trading is a zero-sum game before costs – every rupee an individual trader loses on a trade is a rupee someone else on the other side of that trade made. SEBI’s data is consistent on who that “someone else” tends to be: proprietary trading desks and Foreign Portfolio Investors (FPIs) have been the consistent net gainers across the same years individual traders were losing money. The regulator’s analysis has also specifically pointed to algorithmic trading entities as accounting for a meaningful share of the profits earned on the other side of these retail losses.

That’s not a coincidence of skill alone. It reflects a structural difference in how the trade is placed – speed, position sizing discipline, and the absence of the emotional decision-making that drives most retail losses.

Why most retail traders lose

SEBI’s disclosures and independent trading research point to a consistent set of behavioral patterns behind these numbers, rather than any single mistake:

• Buying options, not selling them. A large share of retail F&O activity is concentrated in buying cheap, far out-of-the-money weekly options – a bet that usually expires worthless. Time decay (theta) works against the buyer every single day the position is held.
• No pre-defined exit. Trades placed without a fixed stop-loss or profit target tend to be closed based on emotion – holding losers too long hoping for a reversal, and cutting winners too early out of fear of giving back gains.
• Overtrading. High-frequency, high-conviction trading without a documented process tends to compound small mistakes into large ones over hundreds of trades a year.
• Position sizing that ignores capital at risk. Undercapitalized accounts trading full lot sizes leave no room to survive a string of losing trades, however statistically rare that string might be.

None of these are unique to India, but the scale of retail participation here – and the ease of placing a trade from a phone in seconds – has made the pattern unusually visible in SEBI’s data.

What actually works instead

The SEBI data doesn’t say F&O trading itself is unwinnable – it says a specific style of undisciplined, buy-side, emotion-driven trading tends to lose. The traders and entities on the winning side of the same data generally share a few traits: they sell options rather than only buying them, they size positions to survive a losing streak, and they follow a documented, repeatable process rather than a fresh decision every single trade.

That’s the entire premise behind algorithmic, rules-based option selling: the entry, exit, stop-loss and position size are all decided in advance and executed by a machine, removing the moment-to-moment emotional decision that the SEBI data suggests is where most retail traders go wrong.

We publish the live, auto-synced performance of all four of our deployed strategies openly, precisely because “trust me” isn’t good enough in a market where 91% of participants lose money:

• Melting Premium 1 – intraday, non-directional option selling
• NiftyX – a second intraday Nifty strategy
• HedgeX – positional, Sell-Today-Buy-Tomorrow (STBT) based
• Weekly TimeTrap – Iron Condor on Nifty weekly expiry

Frequently asked questions

Does this mean I should never trade options?

Not necessarily – it means the specific pattern most retail traders follow (buying options, no stop-loss, overtrading) is what the data shows losing consistently. A documented, risk-managed process is a different proposition entirely.

Is algo trading guaranteed to be profitable?

No. Algorithmic execution removes manual error and emotional decision-making, but every strategy still carries market risk, and past performance is never a guarantee of future results.

Where can I see real performance data instead of marketing claims?

Each of our four deployed strategies has its own live performance page, syncing directly from our trading log – see all four here.