India's options trading boom hides billions of losses for retail traders

economictimes.indiatimes.com:

Ansari is meeting his fans in Pune, about 90 miles south of Mumbai. He’s selling the dream of stock market riches to India’s fast-growing cadre of small investors. With half a million social media followers, he’s pushing an especially risky strategy: trading stock options, often as all-or-nothing bets on future share prices.

In 2023, Indian investors traded 85 billion options ­contracts, more than anywhere else in the world. The country has topped the charts since 2019, when it first overtook the US in the volume of annual trades. (The US still buys and sells the most by dollar value.)

At conferences like Ansari’s, promoters, or influencers, encourage the rank and file to get their piece of one of the world’s best-performing economies and stock markets. Video courses flood the internet with catchy titles: “Become a PRICE ACTION Beast.” “Easy Options.” “Options Trading Tricks.” “Best Scalping Strategy Ever.” “Become a Supply & Demand ‘SNIPER.’ ”

In India retail investors make up 35% of options trades. Institutions, seeking to hedge their risk or profit for their companies’ accounts, handle the rest. Regulators are alarmed that regular folk are bypassing the tried-and-true way to build wealth: buying and holding stocks and mutual funds.

Instead they’re engaging in pure speculation. The average time an Indian trader holds an option is less than 30 minutes, according to data from mutual fund provider Axis Asset Management Co. “If you want to gamble, if you need diabetes and high blood pressure, then go into this