Here is SP (name withheld on request), who narrates his story offering valuable lessons for anyone considering entering the high-risk world of options trading:
Over the past eight to nine years, I lost approximately ₹60 lakh in options trading, a loss so severe that I am now deeply in debt, which is almost that amount. I owe money to 11 different lenders. I have a negative net worth and no assets to sell.
My journey began in 2015 while pursuing an MBA in Pune. A friend introduced me to the concept of futures and options, and even the professors encouraged us to invest in the markets as a learning experience. Excited by the prospect, I opened an account with a discount broker (Upstox) and made my first trade—an SBI call option. I made a modest profit of ₹800, but it was enough to spark a fascination that would eventually lead to financial losses.
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After graduating, I started working at a bank in Mumbai with a modest salary of ₹50,000. I continued trading options for some additional income. The bank allowed employees to borrow money at just 5% interest, up to a limit of ₹1 lakh. I saw this as an easy arbitrage opportunity—borrow at 5% and aim for a return of 15-20%. But the reality of trading was far from my expectations.
As I switched jobs and my salary increased, my obsession with options trading only grew. There were times when I made money, like when I held IRCTC put option that soared in value when an announcment caused a stock crash. Then I made profit from puts on Adani Group companies just before the Hindenburg report in 2023. Profits from that trade were enough to part finance my wedding.
However, for every win, there were losses. With each loss, I dug a deeper hole, borrowing more to recoup the losses. I tried various trading strategies—technical analysis, market profiles, and even financial astrology and paid courses—but nothing yielded sustained profits.
Money lost is visible, but time lost is also important. That time could have been spent in up-skilling or in pursuing new courses and certifications.
There are good experts whose calls work, but you have to follow all their calls without question. You can’t listen to just some of their advice, which is what I did.
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I also began borrowing money to place as a margin with brokers. The financial system made it easy, especially when you have credit cards. You can pay just the minimum amount due and keep borrowing even without hurting your Cibil score. You can then use the card to pay yourself or your family’s rent.
Many websites and apps allow this for expenditures like society maintenance, office rent and deposit to buy a house. I used this money to trade instead. I also withdrew money out of my Employee Provident Fund (EPF) on grounds of advance for medical treatment.
For consistent success in F&O trading, your skill level needs to be as high as that of a top-ranked competitive exam candidate
Now, I owe money to about 11 lenders apart from friends and acquaintances. Out of the lending institutions, around 3-4 major ones have agreed to settle after my loans turned NPA (after 90 days of non-payment). But there was a lot of harassment in the meantime.
They didn’t just call me but anyone they could find linked to me through my social media profile, including my employer and my spouse’s relatives. The relentless pressure pushed me to seek help from debt settlement agents, but they turned out to be scammers who only worsened my situation.
Over the past few months, I have taken it upon myself to negotiate with lenders. So far, four out of the eleven lenders have agreed to settle for 30-45% of the amount due. Despite the challenges, I am hopeful. I am determined to settle all my debts, rebuild my career, and repair my credit score.
Lessons learned
Reflecting on my journey, here are some hard-earned wisdom:
1. Lying to your family about losses and loans takes a heavy emotional toll. The moral guilt is unbearable.
2. Money lost is visible, but time lost is also important. That time could have been spent in up-skilling or in pursuing new courses and certifications.
3. Live within your means and avoid overextending yourself financially. Leveraging your income can be a grave mistake that leads to financial disaster
4. For consistent success in F&O trading, your skill level needs to be as high as that of a top-ranked competitive exam candidate (think All India Rank 100).
5. While personal loan disclaimers often state that the money should not be used for capital markets, there’s no strict control on this. Borrowing money for trading purposes is far too easy: you can just give a lame excuse such as house repair and renovation. The financial system needs to check this.
Mint has seen P&L screenshots and loan recovery notices of SP to verify the claims made in this story.
SP’s story is a stark reminder of the perils of F&O trading. While the allure of quick profits can be tempting, the risks are significant, and the consequences can be devastating.
Note: If you would like to get in touch with Mint and tell us your own story, please reach out to Neil Borate at neil.b@livemint.com
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