Everyone knows that stock market investment is a risky affair, sometimes at the peak of profit's Everest, sometimes in the depths of loss's Atlantic abyss, from market investors to the general public. Still, hoping for slightly higher returns than traditional instruments, countrymen invest there. The cautious ones take the roundabout route through mutual funds, while the adventure-loving risk-takers, saying "Dar Ke Aage Jeet Hai," dive directly into the future's womb of the stock market through Futures and Options trading.
When ‘no fear’ turns costly: F&O hype and hidden risks
However, throwing away the wrapper of caution and enthusiastically jumping into Futures and Options trading without properly understanding the market's twists and turns, saying "no fear"—this over-enthusiasm is actually causing more harm than good, as evidenced by a recent report from SEBI, the stock market regulatory body. The report clearly shows with data and statistics that in the last 4 financial years—2021-22, 2022-23, 2023-24, and 2024-25—the country's 1.23 crore retail Futures and Options traders lost an incredible average of ₹1.81 lakh each in this high-risk, high-return game of options trading. The proof that imposing legal restrictions hasn't been particularly effective is that retail traders' net losses in the 2024-25 financial year jumped 41% from ₹74,812 crore in 2023-24 to ₹1.05 lakh crore.
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The centre has more reasons to worry. The Income Tax Department's own statistics show that the Futures and Options trading market has grown so large compared to the country's economy that it's causing concern among policymakers. Additionally, unique individual retail traders in this segment reached nearly 96 lakh in the 2024-25 financial year, about 11% more than in the previous year, when it was 86.3 lakh. Note the average retail loss and average loss per trader for 2024-25 as well—₹1.06 lakh crore and ₹1.1 lakh respectively. At a time when the country's GDP was ₹300 lakh crore, Futures and Options derivative trading reached ₹1.5 lakh crore. In plain Bengali, that's 500 times the country's GDP.
Budget’s hard message: Play the game, pay the price
So, where gentle persuasion isn't working, Finance Minister Nirmala Sitharaman has done in this year's central budget what any average person would do to curb this—significantly increased the effective Securities Transaction Tax (STT) on Futures and Options trading in one stroke. This means that if you want to essentially gamble in this market, you can play. But you'll have to pay considerably more tax to the government than before. And if you step away from the game due to tax pressure, your funds remain safe. However, to make it clear that she's not discouraging countrymen from investing in the stock market or mutual funds at all, she hasn't increased the effective STT on equity delivery or non-derivative trades by even one paisa from before. So it's clear that Nirmala's purpose is to curb this growing, dangerous trend. From the statistics of last year, it's clear that the budget target of ₹10,000 crore additional revenue from this year won't be met. While the last budget anticipated ₹63,670 crore in income, the centre received only about ₹45,000 crore. So most market experts, and even Nirmala herself, don't have much hope that this will be fulfilled in the 2026-27 financial year. Rather, by making each trading transaction more expensive, she's requesting countrymen to step away from this risky game.
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What experts say
Experts claim this makes one thing clear. By increasing STT and removing the dividend set-off clause, the central government wants to make most high-frequency futures options trades and arbitrage trades less attractive than before. This aims to curb the number of traders coming to the market hoping for sky-high profits in a short time.
Now, while it's not possible to give a direct answer to the debate about which is riskier—Futures or Options—SEBI's report states that the percentage of individual traders losing money in futures contracts has consistently remained lower than the percentage of individual traders losing money in options contracts over the last 3 financial years. But whatever decision you make, know that the chances of loss are higher than profit. The money is yours, and the investment decision is also yours. But you know, "Jo Jeeta Wohi Sikandar!"
