SEBI F&O Study: Why Retail Traders Lost Rs 91,685 Cr

A number came out recently that I have not been able to stop thinking about, and I think every retail trader in India needs to sit with it too.

The number

SEBI released its latest study on retail participation in equity Futures and Options. The headline figure: retail traders lost ₹91,685 crore in FY26 alone.

Read that again slowly. Ninety-one thousand, six hundred and eighty-five crore rupees. In one year. From retail accounts, people like you and me, trading from their phones between meetings or after work.

My first reaction was the same as most people’s. I assumed this was another story about how the market is rigged, how FIIs move prices against the small trader, how options are a casino dressed up as finance.

Then I actually read the study. And the real story is both simpler and more uncomfortable than that.

What the data actually shows

92 percent of total retail losses came from one specific behaviour: buying options. Not selling them. Not spreading them. Not hedging an existing position with them. Buying naked calls and puts, outright, and hoping for a big enough move before expiry.

The study also found that 97 percent of active F&O traders were predominantly option buyers. That is almost the entire retail base concentrated on one side of the trade, the side the data says is losing the most.

This is not a coincidence. It is structural. And once you understand why, the SEBI number stops looking like bad luck and starts looking like a predictable outcome.

The three things a long option needs

Here is the part nobody explains clearly on finance reels or quick tip accounts.

When you buy a call or a put, you are not making one bet. You are making three bets at once, and you need all three to land.

First, direction. The underlying has to move the way you expect. Second, magnitude. It is not enough to be directionally right, the move has to be big enough to cover the premium you paid. Third, timing. All of this has to happen before expiry, because every single day that passes, time decay is quietly eating into the value of what you bought.

Miss any one of these three and the trade loses money, even if your overall market view turns out to be correct. You can be right about Nifty’s direction for the month and still lose on the specific option you bought, because the move did not happen fast enough or big enough before your contract expired.

This is why option buying feels intuitive and behaves so differently in practice. You risk a small, defined premium for a potentially large payoff. That asymmetry is exactly what makes it psychologically appealing. It is also exactly why the odds are stacked against the buyer from the moment the trade is placed. Time is not neutral in this trade. Time is working against you from candle one.

Why I stopped calling this a market problem

I have traded through enough cycles now to notice a pattern that has nothing to do with market direction.

The traders I have seen last in F&O, the ones still trading five years later instead of one bad quarter later, are rarely the ones with the sharpest market view. I have met plenty of people who could read a chart beautifully and still blew up their account within a year.

What separates the traders who survive is almost boring to describe. The same position size on a good week and a bad week. The same entry rule regardless of how the last trade went. The same exit rule, followed even when every instinct says to hold on just one more day.

Paisa dikhta hai, process nahi dikhta. Everyone shows you the profit screenshot. Nobody shows you the twenty quiet, disciplined trades that got them there, most of which were probably small wins or small losses that never made it into a highlight reel.

The SEBI number is not telling us that 9 out of 10 traders have bad market opinions. It is telling us that 9 out of 10 traders do not have a process that survives contact with their own emotions.

What I did about it

I did not fix this for myself by finding a better strategy or a better indicator. There is no indicator that fixes a lack of process. I fixed it by building one.

Fixed position sizing that does not change because I am feeling confident or cautious. Entry rules I follow regardless of how the previous trade went. Exit rules that execute the plan instead of my mood executing it.

That discipline, turned into an actual structured system rather than a mental habit I had to enforce through willpower alone, is the entire idea behind the Execution System I built. It is not a signal service, and it is not a prediction tool. Nobody can predict Nifty or Bank Nifty with certainty, including me, and I would be lying if I told you otherwise. It is a structured way to actually execute a plan when the market is doing its best to talk you out of it mid trade.

Where this leaves you

If the SEBI number at the start of this article feels uncomfortably close to your own trading year, I would ask you one honest question before you place your next trade. Do you have a process, or do you have a feeling you are calling a process?

If it is the second one, it might be worth fifteen minutes of your time to look at what a real execution process looks like: bit.ly/4zlxkFZ

I will be writing more about the mechanics behind this study and what it means for how retail traders should think about F&O in the coming weeks. If this was useful, I would genuinely like to know what part of your own process breaks first when a trade goes against you. Reply or comment; I read every single one.

Trade safe,

Sachin