F&O Risk Disclosure

Headline risk

F&O means Futures and Options. Investment in the securities market is subject to market risks; read all the related documents carefully before investing. Past performance is not indicative of future results. Trading in derivatives can and does result in losses exceeding the capital you put up, do not trade F&O unless you understand the risks and can afford the outcomes described on this page.

SEBI prescribed disclosure

Read this first.The summary below is Agroy’s plain-English rendering of the disclosures prescribed by SEBI. The mandatory verbatim text lives in SEBI’s Risk Disclosure Document for Capital Market and Derivatives Segments (opens in new tab). Read the prescribed document in full before you place your first F&O trade, by trading you are deemed to have read and accepted it.

The on-page summary is provided for accessibility. Where any difference arises between this page and the SEBI Risk Disclosure Document, the SEBI document prevails. This page is published per the SEBI Master Circular for Stock Brokers (opens in new tab) (consolidated May 2024).

Key SEBI study findings

SEBI has published two studies on individual F&O trader outcomes. The 2024 follow-up extended the period and re-confirmed the original conclusion at scale.

2024 follow-up study (FY 2021-22 to FY 2023-24 (three-year window))

~93% of individual traders in the equity F&O segment incurred net losses.
Aggregate net losses across individual traders amounted to ~₹1.81 lakh crore over the three-year window.
Transaction costs continued to consume a meaningful share of both losses and profits, most loss-makers paid more in brokerage, statutory levies and exchange fees than they recovered.

Source: Updated study on profit and loss of individual traders in equity F&O segment (opens in new tab) (SEBI, 2024).

Original 2023 study (FY 2021-22)

9 out of 10 individual tradersin the equity F&O segment incurred net losses.
On average, loss-makers registered net trading losses close to ₹50,000.
Loss-makers expended an additional 28% of net trading losses as transaction costs.
Even profit-makers incurred between 15% and 50% of net trading profits as transaction costs.

Source: Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment (opens in new tab) (SEBI, 2023).

Risks you should consider

Leverage risk:F&O contracts are leveraged. A small movement in the underlying can produce a large gain or loss, sometimes larger than the margin you put up.
Time decay (theta):Options lose value as expiry approaches, even when the underlying doesn’t move against you.
Liquidity risk: Far-month or far-strike contracts can be illiquid; you may not be able to close a position at a fair price when you want to.
Margin call risk: You may be required to pay additional margin at short notice. Failure to do so will result in liquidation of positions, sometimes at unfavourable prices.
Additional Surveillance Margins (ASM) / Extra margins: Exchanges raise margins on high-volatility names without prior notice. A trade that was within margin limits at entry can move into a shortfall later the same day.
Settlement and assignment risk: In-the-money options may be assigned on expiry, leading to obligations you may not have anticipated.
Physical settlement (stock derivatives):Per SEBI’s phased mandate, all stock derivative contracts (stock futures + stock options) settle physically, not in cash. An in-the-money long call held to expiry obligates you to take delivery of the underlying shares and pay the full notional value, well beyond the margin posted. Always close or roll stock F&O positions before expiry unless you intend to take or give delivery.
Ban-period (MWPL) rules:When a stock’s Market-Wide Position Limit reaches the threshold set by SEBI and the exchanges, the stock enters a ban period, fresh F&O positions are prohibited and only position-reduction is allowed until OI falls below the trigger. Existing positions can be squeezed during this window.
Index option physical settlement is cash: Index F&O (NIFTY, BANKNIFTY, FINNIFTY etc.) settles in cash. Stock F&O does not. Confusing the two is one of the most common expiry-day losses for retail traders.

Recent regulatory changes (2024)

SEBI tightened the index-derivatives framework in 2024 to address retail F&O losses. The headline changes that affect every retail trader:

One weekly expiry per exchange (effective October 2024). NSE and BSE may each offer only one weekly index-options expiry. Strategies that relied on multiple weekly expiries across indices need to be rebuilt.
Increased lot sizes for index derivatives (effective November 2024 onwards). NIFTY 50 lot size moved from 25 to 75; BANK NIFTY from 15 to 30; FINNIFTY from 25 to 65 (verify the current size with the exchange before trading). Notional exposure per lot is meaningfully higher than retail traders may remember.
Upfront premium collection for option buyers, brokers must collect the full option premium upfront from buyers; no leverage on the premium itself.
Extreme Loss Margin (ELM) on expiry-day index options, additional margin applies to short index options on expiry day to dampen tail-risk concentration.

These changes are operative today. Run your strategy through our brokerage + statutory cost calculator to see what current lot sizes and the full charge stack look like before you commit capital.

Before you trade F&O

Understand the contract specifications (lot size, tick size, expiry, settlement type, cash vs physical) for every instrument you intend to trade.
Use the SPAN margin calculator (opens in new tab) to estimate the margin required for your strategy across NSE F&O, currency and commodity segments.
Set position and per-trade loss limits, and stick to them.
Maintain sufficient funds to meet upfront margin and any additional margin calls during the day, including possible ASM increases.
Read SEBI’s Risk Disclosure Document for Capital Market and Derivatives Segments (opens in new tab) and the relevant exchange circulars in full.
Do not trade F&O unless you understand the risks above and can afford to lose the amount you intend to deploy. Derivatives are not a substitute for SIPs or long-term equity for the bulk of retail investors.

Need help understanding F&O?

If anything on this page is unclear, our customer-care and research desks can walk you through the basics before you take a position.

Customer care: +91-8448897100 · customercare@agroy.com · Mon-Fri 9:00am to 6:00pm
Margin calculator: Open the SPAN calculator (opens in new tab)
General queries: Contact page

Headline risk

SEBI prescribed disclosure

Key SEBI study findings

SEBI has published two studies on individual F&O trader outcomes. The 2024 follow-up extended the period and re-confirmed the original conclusion at scale.

2024 follow-up study (FY 2021-22 to FY 2023-24 (three-year window))

~93% of individual traders in the equity F&O segment incurred net losses.
Aggregate net losses across individual traders amounted to ~₹1.81 lakh crore over the three-year window.
Transaction costs continued to consume a meaningful share of both losses and profits, most loss-makers paid more in brokerage, statutory levies and exchange fees than they recovered.

Source: Updated study on profit and loss of individual traders in equity F&O segment (opens in new tab) (SEBI, 2024).

Original 2023 study (FY 2021-22)

9 out of 10 individual tradersin the equity F&O segment incurred net losses.
On average, loss-makers registered net trading losses close to ₹50,000.
Loss-makers expended an additional 28% of net trading losses as transaction costs.
Even profit-makers incurred between 15% and 50% of net trading profits as transaction costs.

Source: Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment (opens in new tab) (SEBI, 2023).

Risks you should consider

Leverage risk:F&O contracts are leveraged. A small movement in the underlying can produce a large gain or loss, sometimes larger than the margin you put up.
Time decay (theta):Options lose value as expiry approaches, even when the underlying doesn’t move against you.
Liquidity risk: Far-month or far-strike contracts can be illiquid; you may not be able to close a position at a fair price when you want to.
Margin call risk: You may be required to pay additional margin at short notice. Failure to do so will result in liquidation of positions, sometimes at unfavourable prices.
Additional Surveillance Margins (ASM) / Extra margins: Exchanges raise margins on high-volatility names without prior notice. A trade that was within margin limits at entry can move into a shortfall later the same day.
Settlement and assignment risk: In-the-money options may be assigned on expiry, leading to obligations you may not have anticipated.
Physical settlement (stock derivatives):Per SEBI’s phased mandate, all stock derivative contracts (stock futures + stock options) settle physically, not in cash. An in-the-money long call held to expiry obligates you to take delivery of the underlying shares and pay the full notional value, well beyond the margin posted. Always close or roll stock F&O positions before expiry unless you intend to take or give delivery.
Ban-period (MWPL) rules:When a stock’s Market-Wide Position Limit reaches the threshold set by SEBI and the exchanges, the stock enters a ban period, fresh F&O positions are prohibited and only position-reduction is allowed until OI falls below the trigger. Existing positions can be squeezed during this window.
Index option physical settlement is cash: Index F&O (NIFTY, BANKNIFTY, FINNIFTY etc.) settles in cash. Stock F&O does not. Confusing the two is one of the most common expiry-day losses for retail traders.

Recent regulatory changes (2024)

SEBI tightened the index-derivatives framework in 2024 to address retail F&O losses. The headline changes that affect every retail trader:

One weekly expiry per exchange (effective October 2024). NSE and BSE may each offer only one weekly index-options expiry. Strategies that relied on multiple weekly expiries across indices need to be rebuilt.
Increased lot sizes for index derivatives (effective November 2024 onwards). NIFTY 50 lot size moved from 25 to 75; BANK NIFTY from 15 to 30; FINNIFTY from 25 to 65 (verify the current size with the exchange before trading). Notional exposure per lot is meaningfully higher than retail traders may remember.
Upfront premium collection for option buyers, brokers must collect the full option premium upfront from buyers; no leverage on the premium itself.
Extreme Loss Margin (ELM) on expiry-day index options, additional margin applies to short index options on expiry day to dampen tail-risk concentration.

These changes are operative today. Run your strategy through our brokerage + statutory cost calculator to see what current lot sizes and the full charge stack look like before you commit capital.

Before you trade F&O

Understand the contract specifications (lot size, tick size, expiry, settlement type, cash vs physical) for every instrument you intend to trade.
Use the SPAN margin calculator (opens in new tab) to estimate the margin required for your strategy across NSE F&O, currency and commodity segments.
Set position and per-trade loss limits, and stick to them.
Maintain sufficient funds to meet upfront margin and any additional margin calls during the day, including possible ASM increases.
Read SEBI’s Risk Disclosure Document for Capital Market and Derivatives Segments (opens in new tab) and the relevant exchange circulars in full.
Do not trade F&O unless you understand the risks above and can afford to lose the amount you intend to deploy. Derivatives are not a substitute for SIPs or long-term equity for the bulk of retail investors.

Need help understanding F&O?

If anything on this page is unclear, our customer-care and research desks can walk you through the basics before you take a position.

Customer care: +91-8448897100 · customercare@agroy.com · Mon-Fri 9:00am to 6:00pm
Margin calculator: Open the SPAN calculator (opens in new tab)
General queries: Contact page

Headline risk

SEBI prescribed disclosure

Key SEBI study findings

2024 follow-up study (FY 2021-22 to FY 2023-24 (three-year window))

Original 2023 study (FY 2021-22)

Risks you should consider

Recent regulatory changes (2024)

Before you trade F&O

Need help understanding F&O?

Related disclosures

Headline risk

SEBI prescribed disclosure

Key SEBI study findings

2024 follow-up study (FY 2021-22 to FY 2023-24 (three-year window))

Original 2023 study (FY 2021-22)

Risks you should consider

Recent regulatory changes (2024)

Before you trade F&O

Need help understanding F&O?

Related disclosures