The derivatives trading volumes in India have overtaken the cash market volumes by a huge margin, all within the last five years. Investors across the world show great proclivity towards derivatives markets, but India’s ratio of derivatives volumes to its cash market volumes is astounding, indicating unbounded excitement. As many as 58.54 billion contracts have been traded on the National Stock Exchange’s equity derivatives segment so far this fiscal year, close to the record 41.76 billion traded in the entire FY23.

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Retail investors currently have over a one-fourth share in turnover in equity derivatives—with nearly 35% in index options, followed by 31% each in index futures and stock optionsAhmedabad Investment. But proprietary traders (brokers trading with their own money rather than clients’) remain the biggest investors, and their share has been consistently rising. More sophisticated investors such as foreign institutional investors have also been tightening their grip over derivatives.

However, dabbling in derivatives can prove risky as it can easily turn into a weapon of mass destructionNew Delhi Investment. Many individuals lack the expertise to deal with this segment. A Sebi study in January pointed out that nine out of 10 investors lose money in F&O trading, and senior citizens suffer the most.

“The sustained interest in F&O trading, despite significant losses and regulatory warnings, underscores the allure of market rallies and zero-day options (a one-day bet),” said Satish Menon, executive director, . “While this trend may persist, the Sebi report’s revelation should act as a collective wake-up callNew Delhi Stock Exchange. Derivatives trading demands in-depth knowledge of products and risks; blindly entering this arena leads to inevitable losses.”

Indore Investment