Before You Trade Futures and Options: SEBI's Findings and the Rules

1. What SEBI found

In FY26, 87.7% of individual traders in equity derivatives incurred net losses after transaction costs. The share had been about nine in ten in each of the four years before: 90.9% in FY25 and 91.1% in FY24.
Aggregate net losses of individual traders were ₹91,685 crore in FY26 and ₹1,11,788 crore in FY25, and about ₹3.85 lakh crore over FY22 to FY26.
Options accounted for 92% of individuals' losses in FY26. Loss-makers were 87.7% of options traders and 66.0% of futures traders.
Before costs, 82.1% of traders lost money in FY26; after costs, 87.7%. Individuals paid about ₹25,000 crore in transaction costs in the year.
SEBI notes that the FY26 fall in the share of loss-makers came with an 18% fall in the number of active traders, so it does not necessarily mean outcomes improved.

Leverage. SEBI sets the value of an index derivative contract at not less than ₹15 lakh when it is introduced, while the margin is a fraction of that. A move of a few per cent in the index can exceed the margin.
Time decay. An option buyer pays a premium that loses value as expiry nears. In FY26, 59% of index options turnover was in contracts on their expiry day, where this decay is fastest.
Costs. Brokerage, STT, exchange charges, GST and stamp duty are paid on every trade, profitable or not. From 1 April 2026, STT on the sale of futures rose to 0.05%, and on the sale of options to 0.15% of the premium.
Selling options collects a premium but carries losses that can be many times that premium.

Contract size: index derivatives start at a contract value of at least ₹15 lakh, and lot sizes are reviewed to keep it between ₹15 lakh and ₹20 lakh.
One weekly benchmark index option per exchange.
Option premium is collected upfront from buyers, so options cannot be bought on intraday leverage.
Expiry days: all equity derivatives on an exchange expire on either Tuesday or Thursday. NSE contracts expire on Tuesdays and BSE contracts on Thursdays.

Could I lose the whole margin, or more, without it affecting my household?
Do I know the lot size, the contract value and the expiry date of what I am trading?
For an option: do I know what happens to the premium if the price does not move?
Have I sized the trade on the stop-loss, in whole lots, and does one lot fit my risk budget?
Have I read my broker's F&O risk disclosure?

A Research Analyst's F&O call states levels and a view. It does not know your capital, and it cannot make F&O suitable for you.

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