Please Note: We Capitalize is a brand name and does not represent a separate legal entity. All research services are rendered by Gowtham Kumaresh, SEBI Registered Research Analyst, Registration No. INH000028981.
Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
1. Key Risks of Derivatives Trading
The following risks are inherent to trading derivative instruments such as Futures and Options. This list is not exhaustive — derivative trading involves additional risks specific to individual products, market conditions, and trading strategies.
Leverage Risk
Derivatives provide leveraged exposure. Small movements in the underlying asset can result in significant gains or losses relative to the capital deployed.
Loss Risk
Trading in derivatives can result in substantial losses. In certain situations, losses may exceed the initial margin deposited.
Time Decay Risk
Options are time-sensitive instruments. Option buyers may lose the entire premium paid if the expected market movement does not occur before expiry.
Volatility Risk
Unexpected market events and rapid price fluctuations can significantly impact derivative positions, sometimes unfavourably and without warning.
Liquidity Risk
Certain contracts may experience lower liquidity, making it difficult to enter or exit positions at desired prices or at all.
Gap Risk
Markets may open significantly higher or lower due to overnight developments, resulting in losses beyond anticipated or stop-loss levels.
2. SEBI Investor Advisory
As per SEBI's 2024 study on individual traders in the equity Futures & Options segment (covering FY22–FY24), 93 out of 100 individual F&O traders incurred net losses. The average net trading loss of loss-making traders was approximately ₹1,10,000. Transaction costs significantly impacted overall profitability — even among traders who recorded gross profits.
As per SEBI's 2024 study, 93 out of 100 individual F&O traders incurred net losses during FY22–FY24. The average net trading loss was approximately ₹1,10,000. Investors are advised to carefully assess their financial situation, investment objectives, and risk tolerance before participating in derivatives trading.
3. Research Disclaimer
Any derivative-related research, analysis, market commentary, or recommendations provided by We Capitalize:
- Are subject to market risks and do not account for individual investor circumstances.
- Do not assure or guarantee profits or returns of any kind.
- May not be suitable for every investor, depending on their financial situation, risk appetite, and investment objectives.
- Should be independently evaluated and verified before acting upon, and should not be construed as investment advice.
- Are based on information and analysis available at the time of publication and may become outdated without notice due to rapidly changing market conditions.
4. Investor Responsibility
Before trading derivatives, investors should take the following steps to protect themselves:
- Understand the product — Fully understand the structure, mechanics, and associated risks of the derivative instrument before trading.
- Use appropriate risk management — Apply position sizing, stop-loss orders, and other risk management practices suited to your risk tolerance.
- Trade only with affordable capital — Never trade derivatives with capital you cannot afford to lose entirely.
- Seek professional advice — Consult a qualified financial or investment professional where necessary before making trading decisions.
Any decision to act on derivative-related research is solely the responsibility of the investor. We Capitalize shall not be held responsible for any investment or trading decision, profit, loss, or consequence arising from the use of its research, recommendations, or market commentary relating to derivatives.
5. Regulatory Disclosure
Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
We Capitalize (Gowtham Kumaresh, INH000028981) is registered with SEBI as a Research Analyst under the SEBI (Research Analysts) Regulations, 2014, and operates strictly within the scope of research services as defined thereunder. We do not provide investment advisory, portfolio management, execution, or distribution services.