I came across this video by Mohak Mangal, where he has detailedly analyzed how Indian Options Traders are making mistakes.
A few of the reasons why traders always lose include the influence of influencers, brokerage firms, and the easy accessibility of options trading through user-friendly platforms, which further contribute to the misconception that options trading is a quick and easy way to make money. This leads to more inexperienced traders entering the market, increasing the overall risk.
I am comparatively new to the market; it’s been only 2 years. I normally engage in options selling and have had decent recent gains and a few losses as well. With an ecosystem developing around options trading in general, such as the recent decrease in lot sizes by NSE, and many people looking forward to options trading in general, how do you think the future of F&O looks?
What changes do you foresee in the future of options trading, considering the increasing interest and the evolving ecosystem surrounding it?
Hi @PrithviRaj
Firstly, welcome to the MadeForTrade community.
The rise of Options Trading has been paramount in recent years, and I was quite shocked when I read that India is the world’s largest options market. It’s also quite startling that traders have incurred around $5.9 billion in losses alone.
I would like to get input from @Naman and @iamshrimohan as well, who are seasoned traders to get a view on this.
These are notional turnover numbers that get quoted in media, not actual premiums that are utilised for trading.
Indian derivative market is evolving. Derivatives as a product is mainly used to Hedge the underlying but people do engage in Trading as well, which in a way is good as it adds liquidity in the market. When I started my career in Prop. Trading the expected market return (return only from trading desk - derivatives) was expected to be around 40% (those times ) while today around 18% is decent. So 10-20 years down the line I think the markets will become more mature - which means people would be making user of Derivatives to hedge their risk and thereby the option premiums may come down for sellers to enjoy the benefit.
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