A new study by the Securities and Exchange Board of India (Sebi), titled "Analysis of Profits & Losses in the Equity Derivatives Segment (FY22-FY24)", suggests that trading in derivatives is a losing proposition. Brokerages and exchanges charge fees, which add to the transaction cost, and net of such costs, derivatives trading is a zero-sum game with every loss equating to commensurate gains for some counter-party. The study indicates 93 per cent of the over 10 million individuals who traded in derivatives (futures and options, or F&O) during the period under review incurred average losses of ₹2 lakh per trader (including transaction cost). The aggregate losses of individuals exceeded ₹1.8 trillion. The biggest losers, about 400,000 traders, suffered average losses of ₹28 lakh, including the transaction cost. In contrast, only 1 per cent of individual traders earned profits exceeding ₹1 lakh, after transaction cost.
This story is from the September 25, 2024 edition of Business Standard.
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This story is from the September 25, 2024 edition of Business Standard.
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