I saw news today that Jane Street Group has generated more than $2.3 billion in revenue from the Indian Stock market using futures and options strategies. It was done in less than 2 years and thus making it one of the major profits of the company's revenue.
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When the news came out the Securities and Exchange Board of India or SEBI is investigating the companies trades to see if they have done any manipulation or not. Now the thing is, I am not sure what will be the outcome of this investigation but I know that most of the retail investors lose money and the big players earn big money using the options and futures.
This is what the Jane Street Group have done. They have a lot of money, so they can raise the derivatives market or can change the course of the market, but a retail investor cannot do that. They will just stick to one way and lose most of the time. This is what happens with most of the retail investors who are investing in the derivative markets, and that's why 95% of them lose money.
Normal stock buying can be a zero-sum game, or, you will get good returns in the future, but the derivative market is always a losing game for retail investors. So if retail investors have to play in the derivative market, they have to have the units with them and do the hedging instead of playing blindly and losing big.
The option and future is been shown as the quick money making scheme for a lot of people but the problem is retail investors always lose money in that. And who profits, the firm who have a lot of money. SEBI has also done a lot of restrictions in the options trading, so that retail investors doesn't lose much but again if someeone wants to lose money then SEBI also cannot help.
