F&O Trading: Risk, Leverage and Reality

A responsible introduction to the risks of equity derivatives.

Equity derivatives can provide leverage and complex payoff structures. That flexibility also increases the importance of margin, position sizing, volatility, expiry and risk management.

SEBI’s FY25 study reported that about 91% of individual traders in the equity derivatives segment incurred losses after transaction costs. This does not mean every participant loses, but it shows why derivatives education and risk awareness matter.

Students should learn contract mechanics, payoff diagrams and risk scenarios before considering strategy complexity.