# How India’s Day Traders Broke the World’s Biggest Options Market

An episode of [Big Take](https://invisiblenetwork.ai/podcast/1578096201), 13 Oct 2026, 18 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/825d4e29-b616-46f4-afd7-ae2b0013005c/02064fda-9c48-4a2a-bf95-b4e2015376e8/audio.mp3?utm_source=Podcast&in_playlist=8b1dd624-a026-43e9-8b57-ae2b00130066

When millions of retail investors piled into India’s options market to get rich quick, losses mounted and regulators launched a sweeping crackdown. On today’s Big Take Asia podcast, guest host Rebecca Choong Wilkins and India equities reporter Savio Shetty break down how the world’s largest options market unraveled, why regulators are struggling to police the country’s latest craze and where traders are placing their bets now. Read more: How India Built (and Broke) the World’s Biggest Options Casino Further listening: Inside Jane Street: The Enigmatic Firm That Rules Wall Street Watch, from Originals: How India's Day Retail Traders Lost Billions Host: Rebecca Choong Wilkins; Guest: Savio Shetty; Produced by Naomi Ng and Yang Yang; Edited by Crispina Robert and Julia Weaver. Engineering by Sean Carter II. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios. Podcasts.
[0:05] Speaker 2: Radio. News. At its very peak, how dominant did India
[0:11] Speaker 2: become in global options trading?
[0:13] Speaker 3: Oh, it was absolutely insane. There were products being introduced left,
[0:17] Speaker 3: right and centre.
[0:20] Speaker 2: Savio Shetty is a Bloomberg reporter covering India equity options
[0:23] Speaker 2: in Mumbai. He tracks derivatives trading in India and was
[0:28] Speaker 2: for a time a derivatives trader himself.
[0:31] Speaker 3: I remember jokingly pointing this out in the actual interview
[0:35] Speaker 3: and I was told that, yes, yes, that is exactly
[0:38] Speaker 3: what we are looking for.
[0:39] Speaker 1: So I fit the bill.
[0:41] Speaker 2: India is the world's biggest equity options market by trading volume.
[0:45] Speaker 2: And during the pandemic, it experienced an unprecedented boom.
[0:50] Speaker 3: Everyone thought, I'm the next Jim Simmons. I'm the next
[0:53] Speaker 3: Ray Dalio. I have multiplied my money 5x, 10x.
[0:57] Speaker 2: With those retail investors came some of the world's most
[1:00] Speaker 2: sophisticated trading firms, eager to cash in on a rapidly
[1:05] Speaker 2: growing market.
[1:06] Speaker 3: You had big Wall Street folks coming here and wanting
[1:09] Speaker 3: a piece of the pie.
[1:10] Speaker 2: And then the tide turned.
[1:12] Speaker 3: Wall Street firms hire quant traders, billions of capital, lots
[1:16] Speaker 3: of other things to make money. And here you had
[1:19] Speaker 3: suddenly people who had no clue what an option was
[1:22] Speaker 3: on Monday trading them on Friday. Retail traders lost billions
[1:27] Speaker 3: of dollars. That billion of dollars for a country that
[1:31] Speaker 3: has a current account deficit.
[1:33] Speaker 1: Significant strain on its currency always.
[1:36] Speaker 2: The fallout was swift. With losses mounting, India's markets regulator
[1:41] Speaker 2: swept in with a host of reforms.
[1:43] Speaker 3: But I think with the way things move in financial markets,
[1:49] Speaker 3: there is always something new that will come up. If
[1:51] Speaker 3: you have to ask where has the speculative fervour gone,
[1:56] Speaker 3: it's probably gone into commodities.
[1:59] Speaker 2: This is The Big Take Asia from Bloomberg News. I'm
[2:02] Speaker 2: Rebecca Chung-Wilkins in for one half. Each week we take
[2:06] Speaker 2: you inside some of the world's biggest and most powerful
[2:09] Speaker 2: economies and the markets, tycoons and businesses that drive this
[2:13] Speaker 2: ever-shifting region. Today on the show, India's options trading frenzy.
[2:20] Speaker 2: Who got rich? Who got burned? And why regulating this
[2:24] Speaker 2: market is such a delicate balancing act. Savio, so tell me,
[2:37] Speaker 2: as if you're speaking to probably not your grandmother, but
[2:39] Speaker 2: my grandmother, in layman's terms, how does options trading actually work?
[2:45] Speaker 1: First of all, I'll say hello, grandmother. It was nice
[2:47] Speaker 1: to meet you.
[2:49] Speaker 2: Bloomberg's Savio Shetty says it's impossible to understand India's options
[2:54] Speaker 2: boom without first understanding how complicated options are to begin with.
[2:59] Speaker 3: Derivatives have futures, they have options, they have forwards. Options
[3:03] Speaker 3: are the most, I think, difficult to understand, which is
[3:06] Speaker 3: why you will see a lot of financial engineers get
[3:09] Speaker 3: into this.
[3:10] Speaker 2: Savu and I started with the basics.
[3:12] Speaker 3: If you take a particular sport, let's just take, for example, football.
[3:16] Speaker 3: The equity is trading or the trading is playing the football.
[3:20] Speaker 3: Options is essentially betting on who's going to win that game.
[3:24] Speaker 3: So it's a derivative based on an underlying product. That
[3:28] Speaker 3: underlying product can be absolutely anything. It can be weather, equities.
[3:31] Speaker 3: But at its very core, an options contract is a punt,
[3:35] Speaker 3: is a risk, is a call on where do you
[3:38] Speaker 3: think that asset is going to go. Whether Spain defeats
[3:42] Speaker 3: Argentina 1-0, 2-0, 3-0. You can also play a draw
[3:46] Speaker 3: if you think Spain and Argentina are not going to score.
[3:49] Speaker 2: In the financial market, an option is simply putting money
[3:53] Speaker 2: on where the price of something will go.
[3:56] Speaker 3: Up, down, up.
[3:57] Speaker 2: All the same, trades also come with various layers involving timing,
[4:02] Speaker 2: limits and expiration dates. You pay a small amount up front.
[4:07] Speaker 2: If you're wrong, you lose the money.
[4:09] Speaker 3: If you win, you can win a lot. It's a
[4:12] Speaker 3: leveraged product. It's probably one of the most leveraged products
[4:15] Speaker 3: that there is. We've had cases in India where option
[4:18] Speaker 3: prices have risen 4000% in under 30 minutes.
[4:22] Speaker 2: It's interesting because even for people who work in finance,
[4:25] Speaker 2: this is a complex product. Trading firms on Wall Street
[4:29] Speaker 2: have quants. They have specialized traders. So how did ordinary
[4:33] Speaker 2: people in India get involved in this?
[4:37] Speaker 3: I think it was the perfect storm, to be very honest.
[4:41] Speaker 3: I think it's a storm right now. Indians have always
[4:45] Speaker 3: shied away from the stock markets. But the population is
[4:49] Speaker 3: getting younger. You have this urge to become rich. That suits,
[4:53] Speaker 3: I think, the gambling instinct. India has very low data prices.
[4:58] Speaker 3: Reliance Jio, which is one of the world's largest telecom operator,
[5:02] Speaker 3: was launched in 2016 at absolutely dirt cheap rates. So
[5:08] Speaker 3: you have a lot of people being on the internet,
[5:11] Speaker 3: browsing stuff, looking at stuff, brokers who have reduced fees
[5:15] Speaker 3: for trading. To give you an example, Zerodha charges 20
[5:18] Speaker 3: rupees for one trade, which is probably 20 cents on
[5:23] Speaker 3: the dollar. Finally, you had the pandemic. You had a
[5:27] Speaker 3: lot of people suddenly sitting at home. Some of them
[5:30] Speaker 3: worried about their jobs. What is going to happen? How
[5:33] Speaker 3: are we going to have money? And then the ease
[5:36] Speaker 3: of trading. India made it very easy to trade. A
[5:38] Speaker 3: person who had never touched a financial instrument could open
[5:43] Speaker 3: a brokerage account in under one day.
[5:47] Speaker 2: And Savio says, unlike in the US, retail traders in
[5:50] Speaker 2: India didn't need to put a certain amount of money
[5:53] Speaker 2: in their brokerage account to trade. People could start trading
[5:56] Speaker 2: with as little.
[5:58] Speaker 3: As $ 10.
[5:58] Speaker 2: What made it more appealing to start dabbling in options
[6:01] Speaker 2: versus all of the traditional products like stocks that are
[6:06] Speaker 2: just much simpler to understand?
[6:07] Speaker 1: I mean, how much does a stock rise in a day?
[6:10] Speaker 3: Rises, what, 5%, 10%?
[6:13] Speaker 1: What do I make?
[6:13] Speaker 3: That's nothing. An option can really rise because it's a
[6:17] Speaker 3: leveraged product. And the definition of leverage is I pay $ 1,
[6:21] Speaker 3: but I get the leverage of $ 10, $ 20, $ 30. So
[6:24] Speaker 3: if it moves up even by one more dollar, I
[6:27] Speaker 3: make $ 20, $ 30x.
[6:28] Speaker 2: As more ordinary people piled into the market, the number
[6:32] Speaker 2: of retail traders exploded, growing from fewer than 1 million
[6:36] Speaker 2: in 2019 to nearly 10 million in just a few years.
[6:40] Speaker 2: India's exchanges like the NSE and BSE added to the
[6:44] Speaker 2: frenzy by rolling out weekly options contracts on different indexes.
[6:49] Speaker 2: These gave traders a fresh chance to bet on the
[6:51] Speaker 2: market every day.
[6:53] Speaker 3: Of the week.
[6:54] Speaker 1: It was a casino.
[6:55] Speaker 3: One day I'm going to casino one, on Tuesday I'm
[6:57] Speaker 3: going to casino two, casino three, casino four, casino five.
[7:00] Speaker 2: By the number of contracts traded, India became the world's
[7:04] Speaker 2: biggest derivatives market. The bets on options grew far bigger
[7:08] Speaker 2: than the underlying stocks themselves, and to a greater degree
[7:11] Speaker 2: than in other markets. Why does it matter? Why is
[7:15] Speaker 2: it a worry if the derivatives market suddenly starts to
[7:19] Speaker 2: dwarf the underlying assets?
[7:22] Speaker 3: I think the plain answer to that is that a
[7:24] Speaker 3: lot of people who don't understand what they're getting into
[7:29] Speaker 3: lose money. And that money can enter far more stable assets,
[7:33] Speaker 3: long-term growth, not only equities. I mean, there are cases
[7:36] Speaker 3: and options where people have lost fortunes in half an hour.
[7:40] Speaker 3: These are contracts where if you don't get to your
[7:43] Speaker 3: target within a certain period of time, you will lose money.
[7:46] Speaker 3: So you not only have to get the direction right,
[7:49] Speaker 3: you also have to get the timing right.
[7:51] Speaker 2: By 2023, India's markets regulator, the Securities and Exchange Board
[7:55] Speaker 2: of India, or SEBI, found that roughly 9 out of
[7:58] Speaker 2: 10 individual traders were losing money. More than $ 33 billion
[8:03] Speaker 2: were wiped out between 2022 and 2025. And the ones
[8:07] Speaker 2: making money? Professional, high-frequency trading firms.
[8:11] Speaker 3: An HFT is essentially someone who buys and sells not
[8:15] Speaker 3: in minutes, not in seconds, probably in milliseconds.
[8:19] Speaker 2: One HFT firm in particular caught the attention of regulators,
[8:23] Speaker 2: Jane Street. a quantitative trading firm in New York.
[8:26] Speaker 3: Jane Street was essentially accused by the Indian regulator of
[8:31] Speaker 3: trying to manipulate the index and make money. Markets in
[8:35] Speaker 3: India start at 9.15. Suddenly at say 10.11, the market
[8:39] Speaker 3: would collapse or it would rise. And there was no
[8:41] Speaker 3: underlying cause to explain this movement. There was no government
[8:45] Speaker 3: official speaking. There was no company saying that We've had
[8:48] Speaker 3: a great quarter two update.
[8:50] Speaker 1: This happened twice. And I think people started.
[8:51] Speaker 3: Realizing that we have a haunted house here.
[8:54] Speaker 1: We need to find who the ghost is.
[8:57] Speaker 2: SEBI accused Jane Street of index manipulation and temporarily banned
[9:01] Speaker 2: it from operating in India. It estimates that Jane Street
[9:05] Speaker 2: made $ 4. 3 billion in net profits during that period. Jane Street,
[9:10] Speaker 2: for its part, denies any wrongdoing and has appealed the case.
[9:14] Speaker 2: Sebi also rolled out new restrictions on options trading in
[9:18] Speaker 2: an attempt to protect retail investors.
[9:21] Speaker 3: The regulator cannot force you to not trade. It can't say,
[9:24] Speaker 3: please don't trade. It has to keep a free affair
[9:27] Speaker 3: open market. What it can do is that the door
[9:30] Speaker 3: to the party was made of plastic and people would
[9:32] Speaker 3: just come in. Now it decided to put an iron door,
[9:35] Speaker 3: put a couple of more locks, make it a little
[9:38] Speaker 3: more difficult to come.
[9:39] Speaker 2: Jane Street and Sebi didn't respond to Savio's request for
[9:41] Speaker 2: comment on his reporting on what happened in the options market.
[9:46] Speaker 2: But when one door closes, another opens. After the break,
[9:51] Speaker 2: the new way India's retail traders are trying to strike
[9:54] Speaker 2: it rich and how regulators are scrambling to keep up.
[10:12] Speaker 2: When India's markets regulator SEBI tightened the rules around short-term
[10:15] Speaker 2: speculative trading in 2024, it roughly tripled the minimum size
[10:20] Speaker 2: of an options contract, meaning it cost retail investors far
[10:24] Speaker 2: more to get in on the action. It also cut
[10:27] Speaker 2: the number of index options that expire on a weekly
[10:30] Speaker 2: basis to just one, making it harder for people to
[10:34] Speaker 2: make frequent, highly leveraged bets.
[10:36] Speaker 3: And it has held. Volumes have fallen by 30-40%. But
[10:41] Speaker 3: I think the regulator has, to be very honest, been
[10:43] Speaker 3: accused at times of throwing the baby out with the bathwater.
[10:46] Speaker 3: So the 10% who made money were like, dude, we
[10:49] Speaker 3: were making money.
[10:51] Speaker 1: Why did you stop this?
[10:52] Speaker 2: So what does the market look like now?
[10:54] Speaker 3: India is still the world's largest derivative market. I don't
[10:58] Speaker 3: think we are going back to the heydays of India's
[11:00] Speaker 3: derivatives boom ever again.
[11:02] Speaker 1: Markets have changed.
[11:03] Speaker 3: Brokers have lost, obviously, trading revenue. Exchange has definitely lost revenue.
[11:11] Speaker 3: The world's largest derivative exchange, which is the National Stock Exchange,
[11:14] Speaker 3: just recently got listed. And there was a cut in
[11:17] Speaker 3: their asking price because I think investors realized that the
[11:21] Speaker 3: heydays may probably be off. India is still a growing market,
[11:25] Speaker 3: but I think those heydays are gone.
[11:28] Speaker 2: Regulators wanted retail investors to redirect their finances into safer products.
[11:33] Speaker 2: But is that actually happening?
[11:35] Speaker 3: Now, most traders have moved to other parts of the market.
[11:39] Speaker 3: So there is the commodities market. India has this deep
[11:43] Speaker 3: affiliation to gold. The largest listed commodity exchange in India
[11:47] Speaker 3: is the multi-commodity exchange MCX. And it's seen its share
[11:52] Speaker 3: price rally significantly because volumes have increased. Of course, it
[11:55] Speaker 3: also has to do with gold's rally and what is
[11:57] Speaker 3: happening there.
[11:58] Speaker 1: Globally with that.
[11:59] Speaker 3: I know most of the traders who've made some money
[12:02] Speaker 3: in the markets. They've increased their time horizon. They've gone
[12:06] Speaker 3: into ETFs, interestingly. So maybe that is another avenue that
[12:11] Speaker 3: could probably see some kind of enhanced trading.
[12:14] Speaker 1: So there is talk of having longer dated options.
[12:17] Speaker 3: They are essentially called leaps, where at least you're not
[12:20] Speaker 3: going to get song to the moment or lose money
[12:23] Speaker 3: the moment you enter it. So I think the regulator
[12:25] Speaker 3: is doing its part. But from an Indian perspective, there
[12:28] Speaker 3: are not a lot of asset classes to put money in.
[12:30] Speaker 2: And it does underscore this dilemma, I think, that regulators
[12:34] Speaker 2: were trying to get at with this issue over the
[12:36] Speaker 2: options risk, which is They want a robust market and
[12:39] Speaker 2: they want a deep market that's maturing, but they don't
[12:43] Speaker 2: want it to become speculative or too speculative. So what
[12:48] Speaker 2: is the challenge there? Can regulators actually figure out that balance?
[12:54] Speaker 1: I think it's difficult.
[12:55] Speaker 3: I think we sometimes don't give regulators enough credit on
[12:58] Speaker 3: how complicated it gets. Because when they try and take
[13:04] Speaker 3: care of one part of the market, another part of
[13:06] Speaker 3: the market gets angry and says, what are you doing?
[13:08] Speaker 1: It's not easy.
[13:10] Speaker 3: There are certain ideas that the regulator has been provided with.
[13:16] Speaker 3: One of them is to have something like South Korea has,
[13:19] Speaker 3: which is like an examination where you first learn about
[13:22] Speaker 3: these products some number of hours before you start trading
[13:26] Speaker 3: complex derivative products. Then there is a minimum net worth
[13:31] Speaker 3: that Rebecca has to be worth X, Y, Z dollars
[13:35] Speaker 3: before she puts money.
[13:38] Speaker 2: If there are signs that the commodities derivatives market is
[13:41] Speaker 2: heating up, are there any guardrails to prevent history repeating itself?
[13:47] Speaker 3: It seems very clear from SEBI's approach that it wants
[13:50] Speaker 3: the commodity market to grow.
[13:52] Speaker 1: If it wants it to.
[13:53] Speaker 3: Grow, it will be highly unlikely that they're going to
[13:56] Speaker 3: put strong guardrails right now. The question to ask then is,
[14:00] Speaker 3: what are the chances that equities repeat here? So I
[14:03] Speaker 3: think one of the reasons why equities saw the kind
[14:06] Speaker 3: of boom they did was because of the weekly options.
[14:11] Speaker 3: Those options don't exist on the commodity side. So it's
[14:16] Speaker 3: quite unlikely that you'll see the same fervor or the
[14:20] Speaker 3: same scope and size that we saw in equity options. Unless,
[14:24] Speaker 3: of course, exchanges introduce these kind of contracts, like a
[14:29] Speaker 3: weekly gold contract or a weekly crude oil contract.
[14:33] Speaker 1: Which I think is highly unlikely.
[14:37] Speaker 3: Given that commodities are far more volatile than equities.
[14:41] Speaker 2: Savio, what is the lesson here?
[14:44] Speaker 3: I think it depends on who you ask what the
[14:46] Speaker 3: lesson is. If you ask the person who burnt his
[14:51] Speaker 3: entire savings, it would be probably not jump on every
[14:56] Speaker 3: fad that comes in. There is nothing called get rich quick.
[15:00] Speaker 3: I think for regulators, it is probably very easy to
[15:04] Speaker 3: blame and say, you know, You should have looked at
[15:06] Speaker 3: these products before. How can you do this? How can
[15:08] Speaker 3: you do that? But India was accused of being closed
[15:12] Speaker 3: for a very long time for not having this.
[15:15] Speaker 1: So you have to balance that.
[15:16] Speaker 3: But I think the overlying part here is that Indians
[15:20] Speaker 3: retail traders lost billions of dollars. We've had people who've
[15:25] Speaker 3: taken debts for five years, 10 years, money lenders calling them, uh,
[15:32] Speaker 3: weddings of sons and daughters being pushed forward.
[15:34] Speaker 1: Maybe not even happening.
[15:36] Speaker 3: And I think that is something that kind of comes
[15:39] Speaker 3: back to me, that beyond just moving numbers on the screen,
[15:42] Speaker 3: there were dreams that were crushed.
[15:44] Speaker 1: There were a lot of things that probably went wrong.
[15:48] Speaker 2: When you get these big moments, these sort of boom
[15:51] Speaker 2: and bust cycles, it does sometimes leave a scar on
[15:55] Speaker 2: the population and it can make them hesitant to invest again.
[15:59] Speaker 2: I'm curious, sort of big picture, do you think this
[16:02] Speaker 2: has left any kind of aftermath sort of psychologically on
[16:06] Speaker 2: the retail investor?
[16:08] Speaker 3: Absolutely has. I have no doubt that it has. But
[16:14] Speaker 3: I think with the way things move in financial markets,
[16:20] Speaker 3: there is always something new that someone will manufacture. Maybe
[16:24] Speaker 3: the regulators loosen regulations a bit.
[16:26] Speaker 1: Here and there.
[16:27] Speaker 3: And you will always have that. So I don't think
[16:29] Speaker 3: the boom and bust cycle will ever, ever, you know, stop.
[16:33] Speaker 3: The aftermath will be that derivatives, as Warren Buffett had
[16:38] Speaker 3: once called them, are weapons of mass destruction. If you
[16:41] Speaker 3: do not know what they are, it will blast and
[16:45] Speaker 3: it will leave a crater. And as with most craters,
[16:48] Speaker 3: they don't get filled with over time. They might become
[16:50] Speaker 3: a bit less visible, but they still exist.
[16:56] Speaker 2: This is The Big Take Asia from Bloomberg News. I'm
[16:59] Speaker 2: Rebecca Chung Wilkins. To get more from The Big Take
[17:02] Speaker 2: and unlimited access to all of Bloomberg.com, subscribe today at
[17:06] Speaker 2: Bloomberg.com slash podcast offer. If you liked the episode, make
[17:10] Speaker 2: sure to subscribe and review The Big Take Asia wherever
[17:13] Speaker 2: you listen to podcasts. It helps people find the show.
[17:17] Speaker 2: Thanks for listening. See you next time.

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