Buffett warned of a ‘time bomb’. Retail traders just lost Rs 91,685 cr to it

Nifty24, 252.0020.16. Motilal Oswal Midcap Fund Direct-Growth.

Key points

• Top Trending Stocks: SBI Share Cost, Axis Bank Share Rate, HDFC Bank Share Cost, Infosys Share Rate, Wipro Share Cost, NTPC Share Rate.
• A recent study by Sebi discovered 88% or 9 out of 10 individual F&O traders still incurred losses in FY26.
• Sebi's latest study demonstrates that 88% of individual F&O traders lost capital in FY26, with options accounting for 92% of aggregate losses.
• Why Indian retail options traders are having a tough time to defuse what Warren Buffett called lethal time bombs.
• Power shift, a déjà vu: Air India could be new CEO's toughest flight yet.

Nifty24, 252.0020.16. Motilal Oswal Midcap Fund Direct-Growth. The Economic Times daily newspaper is available online now.

Sebi's latest study demonstrates that 88% of individual F&O traders lost capital in FY26, with options accounting for 92% of aggregate losses. Despite reduced trading volumes, retail losses remained substantial, reinforcing Warren Buffett's longstanding warnings regarding derivatives. Regulatory measures, including higher STT, aim to curb excessive speculation and protect small investors.

Market regulator Sebi has again sounded an alarm over heavy retail losses in the futures and options segment, spooking investors regarding what legendary market veteran Warren Buffett once called lethal "time bombs". A recent study by Sebi discovered 88% or 9 out of 10 individual F&O traders still incurred losses in FY26. Options remained the main source of losses. The market regulator remarked around 92% of aggregate losses incurred by individual traders came from options trading.

Notably, the market regulator, as well as the administration, has been advising investors to tread with caution in the derivatives market. It wiped off massive sums of retail investors' wealth. This may remind investors of what Warren Buffett once remarked. Warren Buffett's warning against F&O.

In his 2002 letter, Buffett called derivatives "time bombs, both for the parties that deal in them and the economic system." "In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal, " he wrote. Live Events.

As always, the Berkshire Hathaway Chairman wrote in the 2002 letter, "The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear." His warnings came true during the 2008 financial crisis, when complex derivatives originally designed to protect banks from deadbeat borrowers continued to their turmoil, being ahead of time. Buffett has reiterated his warnings against F&O a number of times. He lately criticized the current stock market environment, highlighting that value investing is fizzling out as residents prefer gambling instead. "It is tough to find values when everybody is preferring gambling, " the 95-year-old legendary investor remarked in an interview to CNBC. "But since humans love to gamble so much, there is more money in actually cultivating gamblers than there are cultivating investors, " the Berkshire Hathaway Chairman remarked. Rs 91, 685 crore gone! 88% retail investors lost funds in F&O trading in FY26 even after strict Sebi rules Why are Indian regulators sounding the alarm?

After presenting the Union Budget in February this year, Union Finance Minister Nirmala Sitharaman remarked that the administration could not remain silent as speculative 'satta' in derivatives inflicts heavy losses on small retail investors. "We are touching only the futures and options segment. No one has rose transaction costs elsewhere. Speculation, what we call 'satta' in Hindi, is highly risky, and plenty of residents with limited funds face heavy losses. In practice, the nominal growth in STT is aimed purely at deterring excessive speculation. We respect market activity, but the administration cannot ignore the losses faced by small investors. This tax is only one element to backing that policy. How the rest of the market is regulated is up to the market regulator, " Sitharaman remarked in an official note to the press after her Budget speech. To curb the derivatives frenzy, the administration climbed STT on F&O trading. Consequently, some reduction in F&O volumes were noticed. As per Sebi's latest study, individual traders posted aggregate net losses of regarding Rs 91, 685 crore in FY26, compared with concerning Rs 1.12 lakh crore in FY25. The fall in total losses came mainly since the number of active individual traders declined, not as outcomes improved meaningfully for those who continued trading. While new entrants dropped concerning 40%, meanwhile, active individual traders declined regarding 20% to 78.6 lakh in FY26 from 98.1 lakh in FY25. Average loss per trader rose marginally to regarding Rs 1.17 lakh during the year. Losing game! How India's small F&O traders carried 70% losses while prop desks created Rs 44, 000 crore (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times).

SEBIF&O tradingretail investorsoptions tradinginvestor lossesderivatives marketWarren Buffettfinancialtime bombsspeculative trading.

Top Trending Stocks: SBI Share Cost, Axis Bank Share Rate, HDFC Bank Share Cost, Infosys Share Rate, Wipro Share Cost, NTPC Share Rate. SEBIF&O tradingretail investorsoptions tradinginvestor lossesderivatives marketWarren Buffettfinancialtime bombsspeculative trading.

Bigger or Better: BEL's biggest shareholder is additionally its biggest customer – and its rule-maker. Final part. Train station to rocket propellants, a Nagpur firm's INR21k-cr journey. Are patients paying the cost for India's PE-led healthcare boom? Notably, the Nifty doesn't predict India. It records it.

Taken together, the developments around buffett warned of a 'time bomb'. Retail traders just lost Rs 91, 685 point to a situation that is still moving, and the coming days should bring more clarity.