How commission-free trading and social media are creating a generation of gambling addicts
Key Points:
• The loss statistics are staggering: Over 93% of individual F&O traders lost money between FY22-FY24, with aggregate losses exceeding ₹1.8 lakh crores
• Social media is weaponizing FOMO: Instagram influencers and YouTube “gurus” showcase overnight millionaire stories while hiding the 99% who lose everything
• Zero-cost trading created a casino: Commission-free platforms removed the natural friction that once protected retail investors from overtrading
• The psychology of addiction: 75% of traders continued trading despite consecutive losses, exhibiting classic gambling addiction behaviours
You open Instagram and see another “22-year-old trader” posing next to a BMW, claiming he made ₹50 lakhs in options trading last month. The caption reads “DM for course” with fire emojis.
Meanwhile, your college friend just lost his entire savings, ₹3 lakhs, trying to replicate those trades. He’s convinced the next trade will be “the one” that makes it all back.
Here’s the uncomfortable truth: We’re witnessing the largest transfer of wealth from retail investors to institutions in Indian market history. And it’s happening one options trade at a time.
The perfect storm has hit: Commission-free trading platforms, social media influence, and the gamification of investing have turned millions of Indians into accidental gamblers.
The result? A generation addicted to options trading that’s systematically destroying their financial futures while making brokers and market makers richer than ever.
The SEBI Massacre: When Numbers Don’t Lie
Let’s start with the brutal mathematics that nobody wants to talk about. SEBI‘s latest study revealed that over 93% of individual traders in equity F&O incurred losses between FY22 and FY24, with aggregate losses exceeding ₹1.8 lakh crores over three years.
Read that again. 93%. That’s not a market correction or bad luck. That’s systematic wealth destruction on an industrial scale.
Here’s what makes this even more disturbing: This follows a previous SEBI report that found 89% of individual F&O traders lost money in FY22. The situation isn’t getting better, it’s getting worse as more retail investors pile into options trading.
Think about any other activity with a 93% failure rate. Would you attempt brain surgery with those odds? Start a restaurant? Jump out of a plane? Yet millions of Indians are treating options trading like a career path with worse odds than a casino slot machine.
Only 1% of individual traders managed to earn profits exceeding ₹1 lakh after adjusting for transaction costs. One percent. You have better odds of getting struck by lightning.
The Instagram Influence Machine
Social media has weaponized financial FOMO like never before. Open any trading-related Instagram account or YouTube channel and you’ll see the same formula: Young traders flashing cash, luxury cars, and screenshots of massive profits.
What you don’t see are the 99 other traders who lost everything trying to replicate those results. For every viral post about a ₹10 lakh options win, there are hundreds of silent losers who’ll never post about their destroyed savings accounts.
These influencers aren’t making money from trading, they’re making money from selling courses, affiliate marketing, and sponsored content. Their actual trading performance? Usually, disastrous. But their marketing performance is phenomenal.
The psychological manipulation is brilliant: They show you the outcome you want, create urgency through limited-time offers, and provide just enough education to make you feel confident without actually preparing you for the reality of options trading.
Here’s the kicker: Most of these “successful traders” are using OPM (Other People’s Money) through prop trading firms or funded accounts. When they win, they keep a percentage. When they lose, someone else pays the bill. It’s the perfect setup for creating viral content with zero real risk.
The Commission-Free Casino
Remember when buying stocks cost ₹20-50 per trade? That friction wasn’t a bug, it was a feature. It naturally discouraged overtrading and forced investors to think twice before making impulsive decisions.
Zerodha, Groww, and other discount brokers eliminated those friction costs, democratizing investing for millions of Indians. But they also created something unintended: A frictionless path to financial destruction.
When trades are free, the psychological barriers disappear. That ₹500 “small” options trade becomes as easy as ordering food on Swiggy. And just like food delivery, the convenience is addictive.
The retail share of options volume has grown dramatically, reaching 45% of total volume, driven partly by commission-free trading. But while access increased, education and risk awareness didn’t keep pace.
Brokers make money through payment for order flow, margin lending, and exchange revenue sharing. They don’t care whether you win or lose individual trades, they care about trading volume. The more you trade, the more they profit, regardless of your results.
The Psychology of Options Addiction
Options trading triggers the same psychological patterns as gambling addiction. The variable ratio reinforcement schedule, where wins are unpredictable but highly rewarding, creates powerful behavioral conditioning.
75% of traders continued trading despite consecutive losses, exhibiting classic addiction symptoms: Chasing losses, escalating bet sizes, and rationalizing bad decisions.
The options market provides constant dopamine hits. Even when you’re losing money overall, the occasional big win creates enough psychological reward to keep you coming back. It’s the same mechanism that keeps people pulling slot machine levers.
40% of day traders quit within a month, while 87% don’t make it to the 3-year mark. But the 13% who survive aren’t necessarily profitable, they’re just persistent enough to keep feeding money into a system designed to extract it.
The Leverage Trap
Options trading isn’t just about predicting market direction, it’s about amplifying risk through leverage. You can control ₹1 lakh worth of stocks with just ₹20,000, making 5x returns possible on small moves.
But leverage cuts both ways. That same 5x multiplier works against you when trades go wrong. A 20% move against your position can wipe out your entire investment in minutes.
The mathematical reality is harsh: Research shows retail investors lose 5-9% on average in options trading around earnings announcements, with losses reaching 10-14% for high-volatility scenarios.
Most retail traders don’t understand options pricing, implied volatility, time decay, or the Greeks that professional traders use to manage risk. They’re essentially bringing knives to gunfights against algorithms and institutional traders with PhD-level quantitative strategies.
The Information Asymmetry Game
While retail traders are getting their “analysis” from Instagram posts and WhatsApp groups, institutional traders have access to:
Real-time order flow data that shows where retail money is positioned. Advanced analytics that predict retail behavior patterns. Direct access to company management and industry experts. Sophisticated risk management systems that automatically cut losses.
It’s not a level playing field, it’s a systematic extraction machine designed to transfer money from uninformed retail traders to sophisticated institutions.
The cruel irony? The more retail participation increases in options, the more profitable it becomes for institutions. Retail traders provide the liquidity and volatility that professional traders exploit for consistent profits.
The Alternative Cost of Options Obsession
Here’s what nobody calculates: The opportunity cost of options trading addiction.
Take a typical options trader who loses ₹2 lakhs over three years (the SEBI average). If that same person had invested ₹5,000 monthly in diversified mutual funds, they’d have approximately ₹2.5 lakhs with potential for long-term growth.
Instead of building wealth through systematic investing, options addicts are destroying capital through systematic gambling. The time spent researching trades, monitoring positions, and recovering from losses could have been used for career development, skill building, or starting businesses.
Most devastating is the psychological damage. Repeated losses create learned helplessness about investing in general. Many options trading casualties swear off all investing, missing out on legitimate wealth-building opportunities.
The Regulatory Response That’s Too Little, Too Late
SEBI is finally waking up to the crisis. New proposals include higher margin requirements, stricter eligibility criteria, and enhanced risk disclosures. But these measures are like putting band-aids on arterial bleeding.
The fundamental problem isn’t regulatory, it’s psychological. People don’t accidentally become options traders, they choose it because they want fast money and someone convinced them it’s possible.
Until social media influencers face real consequences for promoting financial gambling to their followers, the cycle will continue. The platforms profit from engagement, influencers profit from courses, and brokers profit from volume while retail investors pay the bill.
The Bottom Line: The House Always Wins
Options trading has become India’s largest and most sophisticated wealth extraction machine. It preys on young people’s ambition, financial ignorance, and desire for quick success.
While individual traders lost ₹1.8 lakh crores over three years, institutional traders profited from algorithmic trading. This isn’t a market, it’s a systematic transfer mechanism from retail to institutional players.
The options trading epidemic isn’t creating traders, it’s creating addicts. And like all addictions, the only winning move is not to play.
Your financial future is too important to gamble away on the false promise of easy money. The real options are building wealth slowly and surely, not losing it quickly and certainly.
