Individual investors' share in equity options at 17-year high, shows data

Individual investors are more active in equity options, relative to other investor categories, than at any other point in the last 17 years.

 

They accounted for 39.1 per cent of the premium paid to trade equity options in September 2025, shows the National Stock Exchange (NSE) data on category-wise turnover, which is released with a lag as part of the NSE Market Pulse report. Their equity options premium turnover was ₹4.2 trillion in the month under review. 

 

Here premium is the amount paid for the right to buy or sell a security. For example, a trader may pay ₹2 as premium for the right to buy a share at ₹50. This gives a clearer picture of the money changing hands in the options segment than the value of the underlying securities (₹50) as only the premium actually changes hands. The Securities and Exchange Board of India (Sebi) had taken a number of measures to cut down on retail speculation through the derivatives market, such as increasing the minimum amount required to invest in such instruments. The steps came after regulatory studies showed that 93 per cent of individual traders in derivatives lost money. The tighter regulations began to be implemented in phases starting November 20, 2024. Derivatives trading has fallen by around one-fourth since.

 

The average premium turnover on the NSE in the first half of 2025-26 (H1FY26) was ₹42.8 trillion compared to ₹57.1 trillion in the same period of FY25. But proprietary and individual investors have increased their share during the same period, even as foreign investors and the rest saw a decline. 

 

“Futures requires huge margins compared to options,” said Chandan Taparia, head of technical and derivatives research at Motilal Oswal Wealth Management. People have shifted from futures to options since it allows them to take similar positions with less capital, according to Taparia. A futures position that costs ₹2 lakh to execute can be undertaken in the options segment for ₹20,000. Those who are looking for a futures-like structure can also create synthetic futures by buying call options and selling put options. A shift of activity from futures to options also has lower transaction costs, which has contributed to increased individual activity in options, whether it is for hedging, speculation or arbitrage, said Taparia.

 

Individual investor activity in derivatives is likely to keep growing, according to Taparia.

 

“The market size is constantly expanding," pointed out Suresh Shukla, chief business officer at SBICAP Securities.

 

Brokerages have opened around 30 million investor accounts since the new norms were brought in. Investor activity from these new accounts also contributes to increased trading activity. A portion of existing retail activity, which had been dampened in the period following the tightening of derivatives norms, has also started to come back, Shukla said, advising caution for new investors dealing with sophisticated instruments like derivatives.

 

"One should understand it very well… at the end of the day, it is a leveraged position," he added.