Getting F&O enabled, and what SEBI's studies found (India)

🎯 In 30 seconds: Your trading account does not allow futures and options until you ask your broker to activate the F&O segment and give proof of income or net worth. Brokers must show SEBI's risk disclosure on derivatives, which you acknowledge. That disclosure exists because of SEBI's own data: its August 2026 study found 87.7% of individual traders in equity derivatives lost money in FY26, an average loss of ₹1.17 lakh per trader, and options made up 92% of those losses. SEBI tightened index derivatives from November 2024 (bigger lots, one weekly expiry per exchange, upfront premium, extra expiry-day margin), and STT on F&O rose from April 2026. If you go ahead, start with positions whose worst case you know in rupees, and keep the amount small.

Why F&O needs separate permission

A learner's licence lets you drive with someone beside you; a full licence comes after a test. Indian brokers treat the F&O segment in a similar way. Opening a demat and trading account lets you buy and sell shares. Futures and options need a separate activation, with financial proof, because the losses can exceed the money you put in.

The cash segment's worst case is that a share goes to zero. In F&O, a sold option or a futures position can lose more than the margin in your account, and you remain liable for the difference. That is why the segment comes with its own checks.

Getting the segment activated

The steps differ a little by broker, but the shape is the same:

Request activation of the F&O (equity derivatives) segment in your broker's app or back office.
Upload proof of financial information. Account opening forms commonly accept one of: a copy of your income tax return acknowledgement, Form 16 or recent salary slips for salaried people, a bank account statement for the last six months, a net worth certificate from a chartered accountant, or a statement of your demat holdings. Brokers set their own minimum values and document age limits, so the exact list and threshold depend on your broker.
Read and accept the risk disclosures, including SEBI's risk disclosure on derivatives.
Wait for verification. The broker checks the document and switches the segment on.

Brokers also ask derivatives clients to keep their financial details up to date, usually once a year, and may deactivate the segment if you do not. Treat activation as a formality the broker must complete, not as a sign that you are ready. The income threshold proves you can pay a broker's bill; it says nothing about whether you understand what you are buying. Demat and trading accounts covers KYC in general.

Never borrow a document to qualify

Some Telegram groups and "trading mentors" offer to arrange income proof or tell beginners to upload a parent's bank statement. Submitting someone else's financial proof is a false declaration to your broker. It also removes the one check that was meant to slow you down. See Scams and red flags.

The risk disclosure you will see

SEBI's circular of 19 May 2023, effective 1 July 2023, requires brokers to show a risk disclosure on derivatives on their websites and to clients when they log in, which clients acknowledge before continuing. The original disclosure was based on SEBI's January 2023 study, which found that 9 out of 10 individual traders in equity F&O lost money in FY22.

It is easy to tap "I agree" without reading. Read it once, slowly, and then read the numbers below. They come from the regulator, using data from brokers and exchanges, not from anyone selling you a course.

What SEBI's studies found

SEBI has published several studies of individual traders in equity derivatives. "Individual traders" includes resident individuals, HUFs, NRIs and sole proprietors.

Study	Period	Main finding
January 2023	FY22	89% of individual F&O traders lost money
September 2024	FY22 to FY24	93% of over 1 crore individual traders lost money; average loss about ₹2 lakh per trader including transaction costs; aggregate losses over ₹1.8 lakh crore over three years
July 2025, revised in August 2026	FY25	90.9% lost money; aggregate net losses revised to about ₹1.12 lakh crore
August 2026	FY26	87.7% lost money; aggregate net losses ₹91,685 crore; average loss ₹1.17 lakh per trader

More detail from the two most recent studies:

Losses are larger than gains. In FY26, the average loss among loss-makers was ₹1.47 lakh, against an average profit of ₹1.22 lakh among profit-makers (August 2026 study).
A few lose very large amounts. The top 3.5% of loss-makers over FY22 to FY24, about 4 lakh traders, lost an average of ₹28 lakh each (September 2024). In FY26, about 23% of traders accounted for nearly 90% of total losses.
Very few make meaningful money. Only 1% of individual traders earned more than ₹1 lakh in profit over FY22 to FY24, after transaction costs (September 2024).
Options are where it happens. 99.3% of individuals in equity derivatives traded options at least once in FY26, 93% traded only options, and options accounted for 92% of individual losses.
Costs are large. Individuals paid about ₹25,000 crore in transaction costs in each of FY25 and FY26. Over FY22 to FY26, transaction costs totalled about ₹1 lakh crore, about half of it brokerage.
Young traders and smaller incomes. Traders under 30 made up 43% of individual traders in FY26, and 89% of them lost money. About three-quarters had declared annual income under ₹5 lakh.
Many have no investments behind them. About 35% of traders active in FY25 to FY26 held no shares or equity mutual funds in demat at the end of FY26.
Losses do not stop people. Over 75% of loss-making traders continued trading in F&O despite consecutive years of losses (September 2024).
Who is on the other side. In FY26, proprietary traders booked gross trading profits of about ₹44,000 crore and foreign portfolio investors about ₹14,000 crore, and 99% of their profits came from entities using algorithms (August 2026).

What the numbers do not say

They do not say that no individual can make money in options. They say that the typical outcome, year after year, across tens of lakhs of people, is a loss, and that the losses are larger and more concentrated than the gains. If you plan to be in the 10% who do not lose, write down why, specifically, before you start.

What SEBI changed, and when

SEBI's circular of 1 October 2024 introduced six measures for index derivatives:

Measure	What it does	Effective from
Contract size	Index derivative contracts worth at least ₹15 lakh at introduction, and ₹15 lakh to ₹20 lakh at each lot review (was ₹5 lakh to ₹10 lakh)	20 November 2024
One weekly index per exchange	Each exchange may offer weekly expiries on only one of its benchmark indices	20 November 2024
Extra expiry-day margin	Additional 2% extreme loss margin on short options expiring that day	20 November 2024
Upfront premium	Brokers must collect the option premium from buyers upfront	1 February 2025
No calendar spread benefit on expiry day	Positions offsetting across expiries lose the margin benefit on the day one leg expires	1 February 2025
Intraday position limit checks	Exchanges check index derivative position limits at least four times a day	1 April 2025

Later changes:

Expiry days (SEBI, 26 May 2025): each exchange's equity derivatives expire on either Tuesday or Thursday. NSE moved to Tuesday from 1 September 2025; BSE uses Thursday.
STT (Finance Act, 2026): from 1 April 2026, STT on selling an option rose from 0.1% to 0.15% of the premium, on exercised options from 0.125% to 0.15% of intrinsic value, and on futures from 0.02% to 0.05%. SEBI's study notes STT paid by individuals in equity derivatives rose from ₹4,920 crore in FY25 to ₹6,645 crore in FY26.
Settlement price (SEBI, 15 October 2026): from 7 December 2026, expiring index contracts stop trading at 3:30 pm and settle on a price built from the last 30 minutes of trading in the underlying shares.

Did the measures work? SEBI's August 2026 study is careful to say its analysis "does not establish a causal relationship". What it reports: active individual traders fell 18%, from 106.2 lakh in FY25 to 87.5 lakh in FY26; the share of loss-makers fell from 90.9% to 87.7%; aggregate losses fell 18%. But the average loss per trader rose slightly, from ₹1.13 lakh to ₹1.17 lakh, and index option premium turnover, after falling 17% in the months after November 2024, recovered and rose sharply in the second half of FY26. Fewer people are trading, and those who remain lose about as much each.

The risks, listed honestly

Total loss of premium. Bought options expire worthless often, especially short-dated OTM ones.
Losses larger than your account. Sold options and futures can lose more than the margin you posted. You owe the rest.
Leverage. A Nifty lot controls about ₹15 lakh of index exposure. Small moves become large rupee swings.
Gaps. Overnight and weekend news can move prices before you can act at 9:15 am. Stop losses do not prevent gap losses.
Time decay. A buyer pays theta every day; with weekly options, every day is expensive.
Physical settlement. Stock options held in the money to expiry require you to buy or deliver the full lot.
Costs. Brokerage, STT, exchange charges, GST and stamp duty, plus the bid-ask spread, are paid on every trade, win or lose.
Liquidity. Outside the near Nifty strikes, spreads can be wide, and exiting can be slow or costly.
Behaviour. Fast feedback, small ticket sizes and occasional big wins make options easy to over-trade. SEBI's data on persistence despite losses is the evidence.

Defined risk vs undefined risk

Every options position falls into one of two groups:

Defined risk: the worst case is known in rupees at the start. Buying a call or a put (worst case: the premium). Buying a spread, such as buying one call and selling a higher-strike call (worst case: the net premium paid). A sold spread, where the bought option caps the loss (worst case: the strike gap x lot minus premium received).
Undefined risk: the worst case is open-ended or very large. Selling a naked call or put, selling straddles and strangles, and holding futures.

Margin rules reflect this. Hedged positions usually need much less margin than naked ones, as covered in Vertical spreads. But low margin is not the same as low risk: a naked short option can need moderate margin and still lose many times that in a crash.

If you start, start with defined risk

Three practical rules for a beginner, all things you control:

Only defined-risk positions until you have a written record of at least several months of trades. If you cannot state the worst case in rupees, do not place the trade.
A capped F&O budget. Decide a total amount you are prepared to lose entirely, keep it separate from savings and investments, and stop when it is gone. A plan for a young person suggests a small trading satellite next to an index core.
One lot, liquid contracts. Near-expiry Nifty options at strikes close to the market have the tightest spreads. Avoid thin stock options while learning.

And one honest option: not trading F&O at all. A low-cost Nifty index fund, held for years, needs no activation, no margin and no expiry. Nothing in SEBI's data suggests that most people improve their long-term finances through short-dated options.

Try it

Before activating anything, do three things in a notebook. First, find and read your broker's risk disclosure on derivatives in full. Write down the two numbers that struck you most. Second, open SEBI's August 2026 study (linked below), go to the executive summary, and note the figures for traders in your age group and income group. Third, write a one-page F&O plan: the maximum amount you will put in, the only position types you will use (defined risk), the number of lots per trade (one), and the point at which you will stop. Sign and date it. If you cannot write it, you are not ready to activate the segment.

Check yourself

What do you need to give your broker to activate F&O? Answer: A request to activate the segment and proof of financial information, such as an ITR acknowledgement, salary slip or Form 16, six months of bank statements, a net worth certificate or a demat holding statement, plus acceptance of the risk disclosures.
What share of individual equity derivatives traders lost money in FY26, according to SEBI's August 2026 study? Answer: 87.7%, with aggregate net losses of ₹91,685 crore.
Name three of SEBI's October 2024 index derivative measures and when they took effect. Answer: Any three of: minimum contract value of ₹15 lakh (20 November 2024), one weekly benchmark index per exchange (20 November 2024), extra 2% ELM on expiry-day short options (20 November 2024), upfront premium collection (1 February 2025), no calendar spread benefit on expiry day (1 February 2025), intraday position limit monitoring (1 April 2025).
Is selling a naked Nifty put a defined-risk or undefined-risk position? Answer: Undefined risk. The loss grows as the Nifty falls and can be many times the premium received.
According to SEBI, who made most of the profits in equity derivatives in FY26? Answer: Proprietary traders and foreign portfolio investors, with 99% of their profits coming from entities using algorithms.

🚦 Getting F&O enabled, and what SEBI's studies found