Thread by @ICICI_Direct

SEBI today released a detailed study on analysis of Profit and Loss of Individual traders in Equity F&O.

We highlight the key observations below
#Trading #riskmanagement
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🗓️ Period of study: FY19 to FY22 with a focus to analyze trends before and after Covid-19 outbreak.

📊Unique F&O traders (Top 10 brokerages): Up over 500% from 7.1 lakhs in FY19 to 45.2 lakhs in FY22

🧑‍💻Male traders are over 80% in both FY19 and FY22

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Most active age group:
- 30-40 years (39%)
- 20-30 years (36% ---> up from 11% in FY19)

💰🔺🔻
Loss making traders in FY22: 89% (vs 85% in FY19)

3 in 20 traders was profitable in FY19, which is now 2 in 20 traders in FY22.

Average loss active traders: Rs. 1.1 lakh in FY22

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Some implied maths:
- Active F&O traders in FY22: 45.2L
- Loss making traders (89%): 40.2L
- Average loss: Rs 1.1 L
- Total losses: Rs 44,251 crores

However, avg. loss excluding outliers (top 5%) is Rs 0.5L. So, average losses of outliers (~2 lakh traders) is Rs 12.5 lakhs.

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Profit makers:

Average loss of loss makers (89%) was 15x the avg. profit by a profit maker (11%)

- Top 1% and top 5% of active profit makers make nearly 51% and 75% of the total profit made.

📌Note: Of 45 lakh active traders, top 4,950 traders make 51% of overall profits.

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Product wise trend:
Split between Futures and Options (for active traders):
- Futures (FY19: 43%, FY22: 11%)
- Options (FY19: 89%, FY22: 98%)

Traders have actively resorted to Options, shifting from Futures.

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Client participation:
A. Options:
- Index Options traders jumped up 8x and Stock Options traders jumped 5x in last 3 years.

- Average losses of 0.77 lakhs in Index Options vs average losses of of 0.66 lakhs in Stock Options.

B. Futures:

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Average P&L across age groups:

Youngest age group (<20 years) comprise 1% of all (i.e. ~45000). Surprisingly, this age group is the best performing with avg loss of 9,257

Note: This group also has the highest avg profit of 4.92L for the profit makers in FY22.