F&O trading is a zero-sum game where one participant’s loss is another’s gain
Accordingly, the STT on option sales has been increased from 0.1 percent to 0.15 percent on the premium from April 1, 2026; for the exercise of options this would be 0.15 percent (0.125 percent) and for the sale of futures 0.02 percent to 0.05 percent.
Currently, options trading – especially index options – dominates trading volumes, with more and more retail investors looking to take advantage of their opportunities there. According to Securities and Exchange Board of India (SEBI) findings, the percentage of individual investors who suffered losses remained at 91 per cent in FY25.
F&O trading is a zero-sum game where one participant’s loss is another’s gain.
A recent Reuters report said Jane Street, which is facing a SEBI probe for making unnecessary profits by ‘manipulating’ banking options, had posted net trading profits of ₹4,700 crore through its arm JSI Investment Pvt Ltd for FY25 and a profit after tax of ₹2,840 crore.
By imposing a steeper STT increase in F&O, the Treasury is targeting the segment with the highest concentration of speculative retail activity. In an interview with business line Sitharaman said, “We’re not talking about STT in general. We’re just talking about futures and options. And that’s where we end up all the time: people calling us to say people are losing money. And who are the ones losing money who normally don’t have that much extra money to speculate? So should the government sit back and watch?” she said.
SEBI initiatives
For its part, the regulator had also implemented several key measures such as limiting the weekly expiry date to just one index, increasing lot sizes and collecting upfront fees from traders. SEBI also withdrew the benefit of margin requirements for index derivatives at maturity for the calendar spread strategy (using two-month contracts) last February. And now the regulator wants to extend this to derivatives on individual stocks, a move that could further increase margin requirements for traders.
These measures have already had an impact on F&O trading volume. According to NSE data, average daily turnover for equity options declined by 24.6 percent and 18.2 percent (yoy) in December 2025 for equity options and futures respectively.
Meanwhile, the Association of NSE Members of India (ANMI), the body of stockbrokers, has approached the Finance Minister seeking a rollback and rationalization of the recent increase in STT, raising concerns over the higher levies significantly increasing transaction costs.
Opposing views
Some market experts believe that this move will not curb speculative trading activities. Zerodha founder and CEO Nithin Kamath Kamath suggested in the X blog post on social media that instead of repeatedly increasing transaction taxes, regulators should consider introducing product suitability standards to determine who is eligible to trade complex derivatives. “I know it’s an unpopular opinion, but this will remove a lot of uncertainty among brokers and traders. It’s a much better approach than death by a thousand STT increases,” he said. He also proposed an STT concession for the cash segment so that volume could shift from F&O to intraday cash deals.
While these suggestions sound valid and logical, one cannot dismiss the losses suffered by individuals. For individuals. it’s more of a behavioral problem (not accepting defeat easily) and losing more and more as you go.
Instead of imposing excessive restrictions, SEBI could consider a temporary ban on trading – say for three months – if an investor suffers losses in three consecutive trades or ₹25,000 per month.
Published on February 6, 2026
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