In fact, newcomers have pushed industry-wide equity options volumes in the December quarter above pre-October 2024 levels, notwithstanding tougher F&O trading curbs—including tripling contract sizes and limiting weekly options launches per exchange to just one.
While the overall number of participants has declined since the new measures were implemented, market leader National Stock Exchange of India Ltd (NSE) has seen participation rebound since the March low.
BSE, whose market share in options has crept up steadily since May 2023 from zero to around 25-26%, doesn’t provide such data publicly, while the regulator takes into account activity on both exchanges to frame new measures.
The average daily premium turnover (ADTV) of index and stock options on National Stock Exchange of India Ltd (NSE) and BSE has risen 23%—the fastest growth in seven quarters—to ₹75,739 crore in the third quarter of 2025-26 (Q3FY26), as on 15 December, from ₹61,446 crore in the previous quarter (Q2FY26), according to data from HDFC Securities Ltd.
Interestingly, this exceeds the ₹73,857 crore turnover recorded in the year-ago quarter (Q2FY25), before Sebi announced the stern measures.
The Sebi measures took effect in a phased manner from Q3FY25, after the regulator found that nine out of ten individuals lost money trading in index options, dragging down the ADTV by 17%, from ₹73,857 crore in Q2FY25 to ₹61,446 crore in Q2FY26, according to the brokerage.
“The rise in premium turnover is reflective of an expanding and stronger market post the Sebi regulatory strictures on options trading,” said Amit Chandra, vice-president (research) at HDFC Securities.
Steady retail participation
This is also borne out by NSE data, which showed that investor count in equity options rose to 3.29 million in October from 3.27 million in September, and 3.11 million in August.
To be sure, the number of investors trading equity options stood at 4.39 million in September 2024, which fell to 2.97 million in March after the implementation of new trading norms.
BSE doesn’t provide such data, but the rise in investor count is represented by data on the NSE, which held a 74.1% share of equity options as of the end of October, with BSE accounting for the rest.
“The rise in turnover reflects a steady expansion in participation, as new and younger investors continue to enter the markets each year,” said Dinesh Thakkar, founder, chairman and managing director of Angel One, India’s third largest broker by clients.
“Many of them (new entrants) start by exploring multiple products, including derivatives, as part of their learning curve. Over time, as they gain experience, a large part of this cohort gradually shifts towards equity cash and mutual funds to build long-term wealth. Even with regulatory curbs, this natural progression of new investors joining the ecosystem can keep overall turnover on an upward trajectory,” he explained.
HDFC Securities’ Chandra added that retail contribution to overall options volumes tends to be relatively less, with individuals trading up to ₹10 lakh each contributing less than 3% to overall traded volumes, while proprietary brokers take the big-ticket bets on the indices.
This is again borne out by NSE data, which shows that investors trading up to ₹10 lakh each contributed just 1.95% to the gross premium turnover, while investors trading over ₹10 crore each accounted for 69% of the total turnover of ₹11.8 trillion in October.
Interestingly, proprietary traders accounted for 72.3% of the ₹8.2 trillion turnover in the above ₹10 crore bucket in October, while retail accounted for only 12.1% and foreign investors for 9.9% of the turnover during the month.
However, in the less than ₹10 lakh bucket, individuals accounted for 99.8% in premium turnover, according to the exchange data, showing retail predominates in the below ₹10 lakh bucket.
A trial by fire
A Sebi study, dated 7 July 2024, found that 91% of 9.6 million individual investors, who traded largely in options, incurred an average loss of ₹1.1 lakh in 2024-25, resulting in a cumulative loss of ₹1.06 trillion in the previous fiscal year. Total losses to individuals between 2021-22 and 2024-25 stood at a whopping ₹2.88 trillion, forcing the regulator to tighten rules for options trading.
After raising barriers to trade in October, the regulator once again set in motion a series of further reforms in phases from July through December 2025. This included imposing a net limit of ₹1,500 crore per client and a gross limit of ₹10,000 crore per day to be monitored on a daily basis by the exchanges. Sebi will closely analyze the impact of these measures on volumes and losses.
While Sebi raised the net limit from ₹500 crore earlier, given the rise in size of Nifty and Sensex contracts, it introduced a gross limit of ₹10,000 crore, which had not existed before July. This put a stop to clients taking outsized positions intraday, which could increase systemic risks.
These limits are known as sentimental open interest and are in addition to the hedge limits for clients.
“These measures add to market discipline and reduce systemic risk, but there is always a fresh group of new investors waiting to fill the gap left by the loss-makers,” said Rajesh Palviya, head of research at Axis Securities Ltd.
He added that the outperformance of large caps over mid- and small-caps had also increased interest in benchmark index options, such as the Nifty, this quarter, compared to the broader market indices.
For instance, the Nifty average level has risen 3.2% quarter-on-quarter to 25,751 in the Q3FY26 through 15 December. This compares with a 2.5% rise in the Nifty Midcap 150 to 22,029 average value and a 1.7% fall in the Nifty Smallcap 250 to 16,929 over the same period.