If you want to know what percentage of option traders make money? and how many option traders are actually losing, then this article will share with you various stats and data that will help you determine how much people are actually making money and how much people are losing.
This article will give you a clear picture of the number of profitable and loss-making traders in India and the amount of loss or profit they are making.
What percentage of people make profit in option trading?
One study from last year by the government agency in charge of markets (Sebi) showed that trading futures and options (F&O) made traders lose money. According to the study, 89% of investors who did these things lost money, while only 11% made money.
Also, we observed that there are no more than 5 lakh derivatives traders in the whole country from an interview with Nithin Kamath, CEO of Zerodha, a while ago.
No doubt, Kamath is telling the truth since Zerodha is by far the biggest broker. When you put these two facts together, you get a pretty sad result: there are very few people who are really making money in option trading.
What is the success rate of option trading?
The stupid answer and common sense are that 90% of people who trade options lose money. Of course, this makes no sense. In this very important way, option trading is not the same as stock trading. [What percentage of option traders make money]
An option trader first figures out what stock they want to buy or sell. Then they figure out what plan they should use to get there. There are other reasons to buy puts to protect your portfolio, and the outcome could be seen as both a win and a failure. Some buyers get into the options market not to make money but to cleverly buy stocks. This can go in a lot of different directions.
The person who asked the question seems to be saying that there is only one way to trade options and only one possible result. Someone who trades options would know not to ask that kind of question.
But if you deliberately want to know the answer, then there are only 5% of option traders who are successful. I know this number is poor and not good. But it is better to take any government exam where the success rate is around 1% or even less. So be optimistic and trust that if you also go through the right process, you can make your name in that 5%.
How profitable is option trading?
In the financial year 2022, an impressive surge in individual traders engaging with the top 10 brokers in the equity F&O segment reached 45.2 lakhs compared to only 7.1 lakhs in FY19, marking an extraordinary 500% increase. Remarkably, 88% of these participants demonstrated active trading.
During FY22, traders within the age bracket of 30–40 years exhibited the highest involvement, constituting 39% of the total traders. [What percentage of option traders make money]
The point that is to be noted is that younger traders aged 20–30 saw a sudden rise in their participation share, increasing from 11% in FY19 to an impressive 36% in FY22.
The situation of individual trading in the equity F&O segment showed a prevailing dominance by male traders, accounting for over 80% in both financial years.
To enhance comprehension, let’s break this data into concise points:
- Total Individual Traders (FY22): 45.2 lakhs (a remarkable 500% increase from FY19).
- Active Traders (FY22): 88%.
- Dominant Age Group (FY22): 30–40 years, contributing 39%.
- Youthful Participation Surge (20–30 years): rose from 11% (FY19) to 36% (FY22).
- Gender Dynamics (FY22): Male traders held a majority, exceeding 80%.
These insights show the dynamic situation of individual trading, showcasing a significant inflow of participants, shifts in age demographics, and prevailing gender patterns.[What percentage of option traders make money]
| Category | FY22 Data |
|---|---|
| Total Individual Traders | 45.2 lakhs (500% increase from FY19) |
| Active Traders | 88% |
| Dominant Age Group | 30–40 years, contributing 39% |
| Youthful Participation Surge (20–30 years) | Rose from 11% (FY19) to 36% (FY22) |
| Gender Dynamics | Male traders held a majority, exceeding 80% |
What is the failure rate of options trading?
- Incidence of Loss: A staggering 89% of individual traders in the equity F&O segment faced losses, equating to 9 out of every 10 traders during FY22.
- Average Loss: On average, the losses incurred by these traders amounted to Rs. 1.1 lakh in the same financial year.
- Active Traders’ Loss: Among active traders, 90% experienced losses, averaging Rs. 1.25 lakh during FY22.
- Net Trading Loss: For active traders (excluding outliers), the average net trading loss approached Rs. 50,000 in FY22.
- Loss-Maker’s Contrast: During FY22, the average loss of an active trader was more than 15 times greater than the average profit of a profit-maker. [What percentage of option traders make money]
What is the success rate of F&O?
- Profitable Traders (FY22): Contrasting the majority, 11% of individual traders in the equity F&O segment turned a profit, with an average gain of Rs. 1.5 lakhs.
- Active Traders’ Profits: The percentage slightly dipped to 10% for active traders, but their average profit rose to Rs. 1.9 lakh during the same period.
- Profitable Active Traders: A mere 6% of individual traders in the equity F&O segment, considered active, managed to make a profit. Their average profit was nearly Rs. 3,400 in FY22.
- The concentration of profits: The top 1% and top 5% of active profit makers, respectively, accounted for almost 51% and 75% of the total net profit.
These figures show a clear picture of the challenging landscape, where a majority faces losses while a smaller fraction of traders make significant profits, contributing significantly to the overall dynamics of the equity F&O segment.
This table provides key data on the failure and success rates of options trading for individual traders in the equity F&O segment during FY22.
| Category | FY22 Data |
|---|---|
| Options Trading Failure | |
| Incidence of Loss | 89% of individual traders faced losses. |
| Average Loss | Average loss: Rs. 1.1 lakh. |
| Active Traders’ Loss | 90% of active traders had losses, averaging Rs. 1.25 lakh. |
| Net Trading Loss | Avg. net trading loss for active traders: Rs. 50,000. |
| Loss-Maker’s Contrast | Avg. loss of an active trader was 15 times greater than the avg. profit of a profit-maker. |
| F&O Success | |
| Profitable Traders (FY22) | 11% of individual traders turned a profit, averaging Rs. 1.5 lakhs. |
| Active Traders’ Profits | 10% of active traders had profits, averaging Rs. 1.9 lakh. |
| Profitable Active Traders | Only 6% of active traders made a profit, avg. nearly Rs. 3,400. |
| Concentration of Profits | Top 1% and top 5% of active profit makers accounted for 51% and 75% of the total net profit. |
Can you realistically make money trading options?
- General Profit and Loss Trends:
- In FY22, individual traders in the equity F&O segment faced an average P&L of (-) Rs. 82,500, a decrease from the (-) Rs. 1.3 lakhs in FY19.
- Active individual traders, on the other hand, experienced an even tougher side, with P&L hitting (-) Rs. 1.4 lakhs (FY19) and (-) Rs. 93,000 (FY22). Non-active traders had a comparatively not-so-good, not-so-bad kind of experience. [What percentage of option traders make money]
- Loss Landscape:
- 89% of individual traders, equivalent to 9 out of 10, encountered losses in FY22, with average losses of Rs. 1.1 lakh.
- Active traders weren’t spared either, as 90% faced losses, averaging Rs. 1.25 lakh in the same period.
- Sparkle of Profit:
- Despite the challenges, 11% of individual traders managed to turn a profit in FY22, securing an average gain of Rs. 1.5 lakh.
- The profit-making percentage dipped slightly to 10% for active traders, but their average profit rose to Rs. 1.9 lakh.
This table provides a summary of the profit and loss trends, loss landscape, and the percentage of traders making a profit in the equity F&O segment during FY22.
| Category | FY22 Data |
|---|---|
| Profit and Loss Trends | |
| Average P&L for Individual Traders | (-) Rs. 82,500 (Decreased from (-) Rs. 1.3 lakhs in FY19) |
| Average P&L for Active Individual Traders | (-) Rs. 1.4 lakhs (FY19) and (-) Rs. 93,000 (FY22) |
| Loss Landscape | |
| Percentage of Individual Traders with Loss | 89% faced losses, averaging Rs. 1.1 lakh |
| Percentage of Active Traders with Loss | 90% faced losses, averaging Rs. 1.25 lakh |
| Sparkle of Profit | |
| Percentage of Profitable Individual Traders | 11% turned a profit, averaging Rs. 1.5 lakh |
| Percentage of Profitable Active Traders | 10% turned a profit, averaging Rs. 1.9 lakh |
My Opinion
Now that you have gone through all this data, yes, it is scary, but you have to see the opposite side of the coin. Also, there are only a few traders in this industry who are successful, and many of them are losers.
But whether in this industry only the success ratio is less or in other industries also. Let’s take the example of UPSC. Lakhs of students prepare for UPSC, but how many students just qualified and got the prestigious titles of IPS, IAS, etc.?
Yes, very few, and the same with other industries. Also, there are many people who are going to fill out the forms for JEE Main and JEE Advanced, but how many people go to IIT or NIT? There are very few.[What percentage of option traders make money]
The same thing applies to trading as well. Someone else’s failure in trading or in any other industry does not mean that we cannot be successful in that industry. It all depends on how committed we are to the process and how much time we are giving?. Failure is good because failure teaches many things, but if we see only failure, we will never succeed in that industry, so the best thing is to learn from the failures.
Even if you have some people who have failed in trading, learn from them why they have failed. What are the mistakes they have made? and learn from them, and try not to repeat those mistakes. This will help you succeed.
According to me, both failure and success are important for that industry, which will teach you many things about that industry in their own way.
My Experience
When I started trading and I was not getting any good results, I saw this data, and I was really demotivated at all. But internally, I know I want to do trading because, as’ you can say, it’s my passion, but I am not finding any. Anyway, where should I start? How should I learn? Then I go to different books.
Trust me, reading books helps me a lot to learn trading. When I was in my first year, I was just at a loss, and I believe that loss is similar to a market fee that everyone pays.
The point that keeps me motivated is that people are losing lots of money, but I have lost a very small amount of money because I started with small capital, if I exclude brokerage, and soon after 10 months, the hard work started paying off.
If you are ready to learn from your mistakes as well as your losses, then I can bet you that you are going to be a trader soon.
Conclusion: What percentage of option traders make money?
In conclusion, the article gives you some information about option trading in India. This shows that a large portion of individual trades lose money, while only a small portion make money.
About 5% of the time, they succeed, and most of the time, they lose a lot of money. Based on the numbers, trading options seems like a tough job. However, the most important thing is to learn from mistakes and failures.
Even though the statistics are discouraging, the people who want to become traders are dedicated to the learning process. Success in trading, like success in many other fields, takes dedication, constant learning, and perseverance.
BEST OF LUCK!
Read also: Beyond Myth: Is option trading easy to learn?
Read also: Budget Trading Unlocked: Can I start option trading with 1000 rupees?
I’m a seasoned trader with over 3 years of experience in financial markets. Throughout my journey, I’ve navigated various market conditions and developed my skills in trading strategies, risk management, and market analysis. Now I am also developing myself as a good digital marketer.