"I followed Technical Analysis in F&O & suffered loss of Rs 1 Crore": PR Sundar

It is no secret that trading in Futures and Options exposes traders to immense risk. In fact, that is why Warren Buffett rightly described derivatives as "Weapons of Mass Destruction".

Most traders and especially trainers are reluctant to reveal their losses. However, noted trader P. R. Sundar made an exception to this and candidly revealed that he has suffered a massive MTM loss of more than Rs. 1 Crore.

"You can see from my face, I am looking very sad. Today, my MTM loss was more than a crore and it is a worst day. This kind of violent move and that too very close to the expiry is a very very great deal. I am sitting with huge losses," he said.

He claimed that the main reason for the big losses was because he had started believing in technical analysis and had taken a bullish view though he had earlier not believed in it.

"I am paying the huge price for that and so I have to go back to my old stand of not beleiving in technical analysis," he added.

He also stated that he had gone wrong in "position sizing" and had made some "silly mistakes".



Retail traders burn fingers in F&O

There are a number of examples of retail traders dabbling in F&O and losing big sums of money. A young trader who bought Nifty call options lost Rs 24 lakhs in a matter of just 5 minutes.

Another recent example is where stock options were bought and sold without knowing that phsical delivery has to be given on expiry. Colossal losses in lakhs of rupees were suffered by people who have no ability to pay such amounts.

SEBI to safeguard retail from pitfalls of F&O

According to a report in the Hindu BusinessLine, SEBI is concerned about the risks associated with the F&O segment and the increasing number of retail investors coming into this segment. It has undertaken a study to gauge the extent of retail presence in this segment. The outcome of the study could lead to regulatory invention if required.

It is also stated that the F&O segment is riskier than investing in stocks. Typically, high networth individuals, traders and speculators participate in this segment. But the rising overall retail participation in the equity markets has got the regulator worried as F&O trades put unaware investors at greater financial risk besides making the market speculative.