Futures, options, and financial ruin: Inside India's F&O trading craze
Trading quickly became a habit, and Sharma soon felt his dream of achieving financial independence—generating a corpus of Rs 1 crore—was getting closer to reality.
But today, Sharma’s account is bleeding red, having racked up losses of Rs 60 lakh, roughly equal to his annual salary. Meanwhile, the habit that started as a cool hobby has now turned into pure addiction. “I just can’t stop! I know I should stop trading for the day if it is not going according to my plan. I know the game is rigged, that most traders lose money… I have all the wisdom, but I am not able to turn my eyes away from the computer screen. I’m addicted to it now like a moth to the flame,” says Sharma, who is the sole breadwinner in his family of five.
PLAYING WITH FUTURES
Sharma is among the millions of amateur Indian traders who have ventured into the risky futures and options (F&O) segment of the equity markets, hitherto reserved for professionals. The lure of making quick money—sometimes in minutes— means many see these derivatives as online casinos. India is now the world’s largest and fastest-growing equity derivatives market, with NSE boasting a 97% global share in terms of contracts traded in the index options segment. Cheap internet, greater penetration of smartphones, rise of finfluencers and the introduction of shorter-term contracts are some of the reasons behind the retail options mania, say industry experts.
Options are contracts that give a trader the right, but not the obligation, to buy/sell a stock or index at a set price by
