A chartered accountant has underscored the perils of futures and options (F&O) trading by recounting the story of a third-year BTech student who has incurred losses amounting to ₹46 lakh through his investment activities.
CA Roshan Agarwal highlighted this student’s financial woes when filing his Income Tax Return, revealing, “Yesterday I filed one ITR of a 3rd year BTech student whose income is ZERO but loss from F&O is 26 lakhs.” According to Agarwal’s assessment, the student had previously lost ₹20 lakh from F&O trading in the preceding year.
Agarwal, based in Assam and managing partner of Agarwal Roshan & Associates, disclosed that the student has resorted to borrowing funds from friends, banks, personal loan apps, and even his parents’ savings to fuel his trading pursuits, which he described as an “addiction.”
“The extent of his losses is concealed from his parents, “Last year I tried to persuade him to abandon F&O trading for quick gains, but he returned this year with even larger losses.”
The student admitted to being unable to quit F&O trading, citing addiction as the reason for persisting despite substantial financial setbacks.
Agarwal concluded his cautionary narrative on social media with a stark warning against the allure of get-rich-quick schemes propagated by influencers. “Young people are enticed by social media representations of huge profits and luxurious lifestyles,” he noted. He also referenced statistics indicating the high failure rate among F&O traders, advising inexperienced investors to avoid the practice without proper expertise and preparation.
Futures and options trading involves speculating on future price movements or hedging against risk. While it offers potential for profit, Agarwal stressed that it also carries significant risks, particularly for inexperienced individual investors.
According to a 2023 Sebi report, 89% of individual investors incurred losses from F&O trading during FY22, with the average loss amounting to ₹1.1 lakh. Conversely, the report noted that the 11% who did make a profit averaged only ₹3,400, highlighting the challenging nature of the endeavor for most participants.