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Why F&O curbs may be backfiring: Nithin Kamath says just 10% of option buyers profit - Edited byAjay Vaishnav - Published OnOct 28, 2026 | 19:41 IST - Last Updated OnOct 28, 2026 | 19:41 IST Sharing approximate profitability figures for individual traders across Zerodha, CEO Nithin Kamath said it was too early to assess profitability in the margin trading facility (MTF), given that it is a relatively new product. Only around 10% of individual options buyers are profitable, compared with about 40% of option sellers and 50% of futures traders, according to Zerodha founder and chief executive officer Nithin Kamath, who has warned that measures to curb derivatives speculation may be pushing retail traders towards riskier behaviour. “One of the unintended consequences of increasing STT and all the other measures to curb F&O speculation is that they may have pushed traders toward even riskier trading behaviour,” Kamath said in a post on X, formerly Twitter. Sharing approximate profitability figures for individual traders across Zerodha, Kamath said it was too early to assess profitability in the margin trading facility (MTF), given that it is a relatively new product. He cautioned against assuming that buying options is safer simply because the maximum loss is limited to the premium paid. “Buying options repeatedly, more often than not, ends with traders losing more money over time than trading futures or selling options,” he said, while clarifying that futures trading and option selling are not low-risk strategies either. Kamath attributed the popularity of options buying to a combination of higher securities transaction tax (STT) on futures, larger contract sizes and the proliferation of weekly expiries. As STT on futures increased over the years, trading activity shifted towards options, which now account for about 90% of futures and options (F&O) activity, he said. Larger contract sizes have also increased the margin required to trade futures or sell options, while options buying requires traders to pay only the premium. The growth of weekly expiries has further shortened trading horizons. With more contracts expiring every week, traders have increasingly shifted from monthly expiries to bets on price movements over much shorter periods, Kamath said. He also pointed to the growth of MTF, which allows traders to borrow against eligible stocks to hold positions for longer periods. Unlike derivatives, MTF is a long-only product, he noted. Crypto derivatives another unintended consequence Kamath said the effects of measures aimed at curbing speculation extend beyond domestic equity derivatives, pointing to rising activity in crypto futures and options. He described crypto F&O as operating in a regulatory grey zone and said some platforms offer leverage of as much as 100-300 times on these contracts. He added that he had come across multiple new platforms advertising crypto derivatives, including perpetual futures, in recent weeks, and said these platforms were unregulated. “The larger point I’m making is that any regulatory or taxation change has second- and third-order effects,” Kamath said, arguing that such changes can alter market structure in ways policymakers may not anticipate. He warned that the risks become more visible when markets fall or move sideways, and liquidity begins to dry up, resulting in wider spreads, higher impact costs and lower trading volumes. “Indian markets are no longer a backwater,” Kamath said, calling for careful consideration of the second- and third-order effects of policy changes and more thoughtful regulatory design and calibration. Also read: Anant Raj Q2 results: Net profit rises 14% to ₹157 crore, revenue up 5% to ₹662 crore
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