MUMBAI: In spite of many regulatory measures to continan derivatives trading by retail investors, options trading continues to account for an overwhelming majority of the market volume, recording substantially weaker outcomes, with 90% of them continuing to lose money, Sebi chairman Tuhin Kanta Pandey has said.
Quoting Sebi’s own recent study, Pandey said losses in options trading continue to remain high, and admitted that as the regulator Sebi must find a balance between protecting investors and ensuring that market development is not disrupted.
“Nearly 97% of traders predominantly follow options-buying strategies, while only around 2% are options sellers,” he told an SBI conclave here Wednesday during a questions-and-answer session with SBI managing director Ashwini Tiwari.
Younger investors, lower-income groups and traders with relatively small equity portfolios also exhibited substantially higher trading intensity relative to their financial resources, Pandey said quoting Sebi study for fiscals 2025 and 2026.
Traders with several consecutive years of participation recorded similarly high loss rates, suggesting that greater trading experience in the equity derivatives segment was not associated with improved profitability, he said.
Noting that as many as 90% traders are in net losses, he said losses also exhibited persistence. Among traders who incurred losses in two consecutive years and continued trading, around 90% incurred losses again in the following year, Pandey said.
Quarterly analysis showed that losses were substantially more frequent than profit with around 85% of trader-quarter observations– that is, the number of traders multiplied by the number of quarters traded–were loss-making, while only around 15% made money.
