Who Made the Money in Options Trading?
- Who Made the Money and How Much?
- So, Who Took the Hit?
- How Have Retail Traders Fared in FandO?
- Costs Are a Real Killer
- How Navia Can Save Option Traders on Brokerage Costs
- For example:
- Age Matters: Young Traders Losing More
- Location Isn’t Everything: Traders Everywhere Lost
- Location-wise Losses of FandO Traders (FY24)
- New Traders: A Painful Start
- Conclusion: The Pros Are Cashing In, While Retail Is Taking the Hit
- Frequently Asked Questions
The SEBI report on the equity derivatives segment (FY22-FY24) revealed that Proprietary Traders and Foreign Portfolio Investors (FPIs) walked away with the profits, mostly thanks to algorithmic trading, while Individual Traders and Others (like Corporates and NRIs) bore the brunt of losses. In short, the experts cashed in, and retail traders, particularly the younger ones, learned the hard way.
💡 Quick Answer
SEBI’s study of the equity derivatives segment for FY22 to FY24 found that proprietary traders and foreign portfolio investors took the profits, largely through algorithmic trading, while individual traders and other entities absorbed the losses. Around 92% of individual traders lost money, and transaction costs widened the gap.
Who Made the Money and How Much?
| Trader Category | Profit / Loss (₹ crore) |
|---|---|
| Proprietary Traders | ₹32,000 crore |
| Foreign Portfolio Investors (FPIs) | ₹26,900 crore |
| Domestic Institutional Investors (DIIs) | ₹200 crore |
- Proprietary Traders earned 96% of their profits using algorithmic trading, while FPIs bagged 97% of their gains using similar strategies.
- DIIs? Well, they made just a modest ₹200 crore, probably by playing it safe with minimal Algo involvement.
So, Who Took the Hit?
| Trader Category | Profit / Loss (₹ crore) | Percentage Using Algo |
|---|---|---|
| Individuals | -₹13,900 crore | 13% |
| Others (Corporates, NRIs, Trusts) | -₹24,500 crore | High losses using Algo |
Individual traders and other entities took substantial losses, with individuals engaging minimally in algorithmic trading.
How Have Retail Traders Fared in F&O?
About 92% of individual traders lost money. In FY24 alone, 91.1% of individual traders lost an average of ₹1.2 lakh each.
| Year | Number of Loss-Making Traders (in lakh) | Average Loss per Person (₹) |
|---|---|---|
| FY22 | 36.1 | ₹1.30 lakh |
| FY23 | 50.0 | ₹1.43 lakh |
| FY24 | 72.9 | ₹1.20 lakh |
Despite all the risks, only 7.2% of traders made profits, and even fewer – just 1% – managed to earn more than ₹1 lakh in net profits.
Costs Are a Real Killer
While losses mount, transaction costs are another sneaky drain on traders’ funds. Between FY22-FY24, retail traders forked out over ₹50,000 crore in transaction costs.
| Type of Cost | Total Amount (₹ crore) | Percentage Share |
|---|---|---|
| Brokerage | ₹25,000 crore | 50% |
| Taxes (STT, GST, Stamp Duty) | ₹13,800 crore | 28% |
| Exchange Fees | ₹10,200 crore | 20% |
How Navia Can Save Option Traders on Brokerage Costs
Navia’s Zero Brokerage plan offers a significant advantage for options traders by eliminating brokerage costs, which typically make up a large portion of transaction expenses. With Navia’s zero brokerage policy, option traders can save a substantial amount on these fees. As we saw above, brokerage alone accounts for 50% of total transaction costs, which can add up quickly, especially for frequent traders. By using Navia Web and Mobile APP, traders can avoid these charges and focus more on effective strategies rather than worrying about high fees eating into their profits.
For example:
If a trader is spending ₹26,000 annually in brokerage fees, switching to Navia’s zero brokerage plans could save that entire amount, potentially improving overall profitability for traders who are already working with tight margins.
Age Matters: Young Traders Losing More
The younger generation, particularly traders under 30, made up 43% of F&O traders in FY24 but saw 93% of them losing money.
| Age Group | Percentage of Loss-Makers |
|---|---|
| Below 30 | 93% |
| 30-40 | 91% |
| 40-50 | 87% |
| Above 50 | 80% |
Location Isn’t Everything: Traders Everywhere Lost
It doesn’t matter if you’re trading from a metropolis or a small town—traders across states saw similar average losses. Southern states like Telangana and Andhra Pradesh stood out with higher average losses.
Location-wise Losses of F&O Traders (FY24)
| State/City | Number of Traders (in lakh) | Average Per Person Loss (₹) |
|---|---|---|
| Telangana | 2.07 | ₹1,97,000 |
| Uttar Pradesh | 9.28 | ₹1,45,000 |
| Andhra Pradesh | 2.11 | ₹1,45,000 |
| Bihar | 3.57 | ₹1,45,000 |
| Madhya Pradesh | 4.28 | ₹1,45,000 |
| West Bengal | 3.94 | ₹1,37,000 |
| Tamil Nadu | 3.04 | ₹1,37,000 |
| Punjab | 2.28 | ₹1,35,000 |
| Maharashtra | 18.78 | ₹1,35,000 |
| Karnataka | 4.02 | ₹1,35,000 |
| Gujarat | 10.09 | ₹1,24,000 |
| Haryana | 3.10 | ₹1,25,000 |
| Delhi | 3.41 | ₹1,10,000 |
| Rajasthan | 5.37 | ₹99,000 |
This table shows that Telangana leads with the highest average per person losses, followed by Uttar Pradesh, Andhra Pradesh, and other regions. Rajasthan traders experienced the lowest average losses among the listed states.
New Traders: A Painful Start
42 lakh new traders entered the F&O game for the first time in FY24. Unfortunately, 92.1% of them suffered losses, averaging around ₹46,000 per person.
| Trader Category | Average Loss (₹) | Percentage of Loss-Makers |
|---|---|---|
| New Traders | ₹46,139 | 92.1% |
| Regular Traders | ₹1,50,477 | 88.7% |
Conclusion: The Pros Are Cashing In, While Retail Is Taking the Hit
It’s clear that proprietary traders and FPIs are the ones making money in the F&O segment, thanks to the dominance of algorithmic trading. Meanwhile, retail traders, especially younger and new entrants, are bearing the brunt of losses. With high transaction costs and the complexities of the market, retail investors should approach derivatives with caution, as the data clearly suggests that it’s a challenging arena for them.
Fortunately, platforms like Navia, with its zero brokerage on f&o plans,can help traders save on costs, giving them a better chance at managing their funds efficiently in a competitive market.
To learn more about how you can be on the right side of options trading read here.
Key Takeaways
- SEBI’s FY22 to FY24 study found proprietary traders and FPIs made the profits, while individuals and other entities took the losses.
- Proprietary traders earned 96% of their profits through algorithmic trading and FPIs 97%, against just 13% algo participation among individuals.
- About 92% of individual traders lost money; in FY24 alone 91.1% lost an average of ₹1.2 lakh each and only 7.2% made a profit.
- Losses were worst for the young: 93% of traders under 30 lost money, against 80% of those above 50.
- 42 lakh people traded F&O for the first time in FY24 and 92.1% of them lost money.
- Brokerage is the single largest slice of retail transaction costs in the study’s cost table, at 50%.
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Frequently Asked Questions
Who made money in options trading according to SEBI?
Proprietary traders and foreign portfolio investors. SEBI’s study of the equity derivatives segment for FY22 to FY24 shows proprietary traders made ₹32,000 crore and FPIs ₹26,900 crore, while domestic institutional investors made ₹200 crore.
How many individual F&O traders lose money?
About 92% of individual traders lost money over the study period. In FY24 alone, 91.1% of individual traders lost an average of ₹1.2 lakh each, only 7.2% made a profit, and just 1% earned more than ₹1 lakh in net profits.
Why do professional traders do better in F&O?
Algorithmic trading. Proprietary traders earned 96% of their profits using algorithmic strategies and FPIs 97%, while only 13% of individual traders used algos at all.
Do younger F&O traders lose more?
Yes. Traders under 30 made up 43% of F&O traders in FY24 and 93% of them lost money. The loss rate falls with age: 91% for 30-40, 87% for 40-50 and 80% above 50.
Do first-time F&O traders fare any better?
No. 42 lakh new traders entered F&O for the first time in FY24 and 92.1% of them suffered losses, averaging around ₹46,139 per person. Regular traders lost more in absolute terms, averaging ₹1,50,477.
Does where you trade from make a difference?
Not much. The study shows traders across states saw similar average losses. Telangana recorded the highest average per person loss at ₹1,97,000 and Rajasthan the lowest at ₹99,000.
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