Why do people bear most of the losses in future and option trading
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http://Big News For Those Trading In F&O, NSE Increased The lot size, know complete details
Today in this article we are going to discuss such a thing which you all would like to read
SEBI believes that 93% investors bear losses. What kind of trading pattern is that which bears 93% loss, its name is future and option trading. To avoid this, SEBI has recently found some solutions
Because Nifty has made some changes following SEBI guidelines so that people can be saved from losses
Whenever it comes to trading, you must have often heard people around your house saying a word. People of old times who formed an opinion about a stock market formed only one opinion and that opinion was that this is gambling, trading is speculation. This trading speculation, this word must have been made for things like future and option, why is it so because the way people get trapped in the greed of cheap things in the greed of speculation and keep getting trapped in the quagmire and lose a lot of their money, in a similar way trading is done. In a case of a type of future and option, people’s opinion came out that when 95% of the investors suffer losses in it, then in what ways does future and option attract people towards itself, despite knowing so much, people still invest, so why do people run madly behind future and option trading, what is the story and why to stop it, Nifty has recently taken some steps which have become headlines
National Stock Exchange has recently fixed the lot size within the derivatives of its 5 big stocks, the lot size has been increased
Let us understand all these things in more detail: –
The big news for those doing future and option trading is that the country’s largest stock exchange National Stock Exchange has increased the lot size for future and option. National Stock Exchange has increased the lot size of future and option as per the new rule of SEBI, now the lot size of Nifty Fifty has increased from 25 to 75, while the lot size of Bank Nifty has increased from 15 to 30.
Fin Nifty lot size has increased from 25 to 65 Mid cap Nifty lot size has increased from 50 to 120 and Nifty 50 lot size has been increased from 10 to 25
This change will be applicable to all new index derivative contracts, weekly monthly, quarterly and half yearly from 20 November 2024 National Stock Exchange also said that the value of new contracts should be at least Rs 15 lakh and this lot size will be decided in such a way that the contract value is between Rs 15 lakh to Rs 20 lakh
NSE :-
until their expiry date comes, while for quarterly and higherly contracts, the lot size of Bank Nifty will be changed to the new lot size at the end of 24 December 2024 and the lot size of Nifty will be changed to the new lot size at the end of 26 December 2024
Today There are also a large number of people who consider the stock market as gambling, meaning if your luck is good then the stock market will make you a king or else it will make you a beggar, but this thing is not completely certain about stock market trading, here it depends on fluctuations and some special things, which experienced traders can easily guess. A recent research by SEBI has revealed that still 93 percent of 100 people’s business and individual trades in the equity future and option segment are incurring losses. This report is based on a report published by SEBI in January 2023, in which it has been found that in the financial year 2022, 89% of investor traders have lost money in futures and options. In July, SEBI has released this report with the aim of preventing instability in the futures and options segment. According to a recent report, from the year 2022 to 24 i.e. during 3 years, 93% of individual trades are incurring losses, whose number was more than 1 crore. is
Individual Trader Total Loss over a period of 3 years from Financial Year 2022
In the middle of the financial year 2024, they have suffered losses of more than lakhs of crores of rupees
Here I would like to give one more information that 93% of the people have suffered losses in future and option trading and the people who have made the most money and taken it away are those who are sitting outside, FPI i.e. Foreign Portfolio Investors, they earned 33000 crores rupees i.e. they invested and they earned and here the Proprietary Traders, s were there, they earned 28000 crores i.e. about 55 crores, these two types of people earned and left, the rest all incurred their loss
What Are Future And Option:-
Actually there is a trading, option trading which is a type of stop campaign
Something is going to happen in future, the price is going to increase. Rahul has sold the goods worth 6000 at the rate of 720 rupees. Earlier it was selling for Rs. 6, now it is selling for Rs. 720, so Rahul is seeing a profit. Rahul thought that it doesn’t matter if there is a premium of Rs. 10, if I am getting an advance of Rs. 10 for a share of Rs. 6000
So he gave Rs. 60000 to Rahul and said that friend you keep this Rs. 60000, this is an advance from me, keep it with you and listen don’t give this Rs. 60000, if I don’t buy your entire share within this month, then I will also get benefited, Rahul will also get benefited, even if it is sold, it will be sold for Rs. 120000, that means if it is sold at Rs. 120, even then I will give him Rs. 720000, Rahul will get benefited in any case, now whoever is the buyer, you can be the buyer, I can also be the buyer
On what is he taking such a big risk, he is taking the risk that this share of Rs. 120, in fact, will increase It is going to be ₹200. Right now I had only 60,000 with me. Instead of 6 lakh, I did all the work in 60,000. As soon as this information comes, this share will become 200. Rahul is bound, I will buy it from him at the rate of 120 rupees and after taking it, sell it for ₹200, I will earn a profit of 80 rupees per share. Bookings worth 60,000 were made from my pocket. At the rate of ₹80 per share, I will be able to work for 4 lakh 80 thousand. This is how we take risks, some make profit, some lose all their premium and walk away. This is called option trading.
Future Trading:-
Future trading is a big thing, what is there in it? You told the party in front of you that Rahul listen to me, I don’t even have ₹60000, I have an idea, this share, there will be a ruckus here, but I will not tell you this because if you come to know, then you will sell this share yourself.
I am telling you that at the end of this year or this month, you do not have to do anything, whether the share takes you to ₹90 or ₹60, sell it to me at the price of 120, I will buy the whole lot.
It means that your share of ₹6000, I will buy it at the price of 120, at 720 rupees, I will leave it, do not buy this lot right now, I do not have money, you said you do not have money and you placed the option.
Tell me, I placed the future, its whole lot for 720, you showed some balance of your account to FD that see, there is already money in my account. I am investing in future, I am not paying at the moment, I will pay at the end of the month, if I make a profit or if I suffer a loss, the money is already deposited in the account, you can withdraw it.
This is the future and option, you understood this story.
Overall, what I mean to say is that for you, this future and option of yours, in these future and options, option trading is making you put token money in the pit.
At the same time, inside the future, whatever deal you have made in the name of buying all the goods in the future, whether it is profit or loss, it will be yours.
Now a big question must have come to your mind that when SEBI knows this, then why does SEBI not stop the whole incident?
If SEBI knows, then why does it not stop it: – How can you stop trading, India is running on trading only.
So what method did SEBI adopt? SEBI has its own method that these college kids, these new people who are 25 to 30 years old, do one thing, they have a lot of interest in future and option. They are taking their stock, increase it, till now they used to ask to buy 6000 shares, make it 18 thousand shares
Meaning if you want to buy then buy 18000 shares instead of 6000 shares, increase the lot size three times in one go
If you buy 18000 then you will have to pay token price or premium price of ₹10 on 18000 shares, then in such a case that advance will also be of ₹200000, the one who does not have 2 lakhs will not come in this future and option trading
Meaning small people who do not have money should get greedy and start gambling, to stop them increase the lot size, SEBI gave this order
Because it had data that the loss per person in future and option is in some lakhs
The states which trade in lakhs the most in future and option trading are
1. Maharashtra Average Loss per person- 74000
2. Gujarat Average Loss per person- 88000
3. Uttar Pradesh Average Loss per Person- 73000
4. Rajasthan Average Loss per Person- 83000
5. Madhya Pradesh Average Loss per Person- 76000
Many demat accounts were opened in India during the Corona period because people started understanding trading because whatever market share is running in the country today means it is leaping
The issue is that when the Sensex is running so fast, people are taking interest in it, only then all this is happening
The number of demat accounts is increasing continuously, people have opened accounts but where did the problem come because people have opened demat accounts but do not have knowledge of the market, so I am telling you people that first understand the market well, read it, then run after the demat account and then jump into the market
SEBI’s new circular has three big things to avoid loss to retail investors:-
1. Upfront collection of premium from Option Buyers:- Upfront collection of option premium will be done from the option buyer. Most brokerages are already following this rule, but those who are not following it will also have to do this. This rule will come into effect from February 1.
2. Increased contract size for index derivatives:- SEBI has increased the contract size for index futures and options from Rs 5 to 10 lakh to Rs 15 lakh. Buyers will have to pay more money for one lot. This rule will come into effect from November 20, 2024.
3. Limiting expiry per exchange:- Bring all the expiry dates of weekly index on the same day. Bring all the five types of expiry together. This is the new rule of SEBI. So in such a situation, the lot size of Nifty 50 has been increased to 75, Nifty Bank to 30, Fin Nifty to 65, Nifty Midcap to 120, Nifty Next to 25.
If the lot size increases, then people with small money or those who want to buy big at a lower price will benefit. The youth who were ready to take risks will avoid it.
Now who will suffer the most loss from this will be the brokers. The big brokers agencies, whether it is Zerodha or Angel One, all these brokers who make people invest in futures and options, they get the most money from brokerage. 65% to 85% of their revenue comes from this futures and options trading.
On one hand, the market is getting bigger and on the other hand, SEBI is bringing such guidelines for futures and options.
Whatever the case may be, the money is yours, invest wisely. There is a principle of investment that you should take out a fund for investment that it is safe with me, I can invest only this, I have to move ahead with this only. You should invest your saved capital on this only when you feel that yes, I can earn some money from this, its loss will not make any difference to me. It is better to invest in mutual funds than futures and options. If you want to do it wisely, then test your knowledge for 1 year and see whether I am able to make money in this work by investing ₹ 10 to ₹ 20000, only then take such risks, rest you people are wise, take your own decision.
Conclusion:- In this article, an article has been written about futures and options, what rule has been implemented in it, it has been discussed by SEBI, thank you.