Defined stop loss, adapting new strategies; here's what F&O experts are advising for 2025

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The equity market was quite volatile in 2024 but one segment that grabbed many headlines was the equity derivatives segment that was high on the regulatory scanner as well, which ultimately led to significant changes in the rules that have altered the dynamics of the whole futures & options (F&O) segment.

With the changing dynamics, investor approach and behaviour also needs a change and here's what some of the top participants of the derivative segment are suggesting investors and traders should do in 2025. Here are the top three tips of F&O experts.

This assumes significance since as per a SEBI study, individual traders in F&O market saw aggregate losses of Rs 1.8 lakh crore over the past three fiscal years, with nearly 93 percent of more than 1 crore investors, or nine out of 10 traders, incurring average losses of Rs 2 lakh each.

Arjun Tandon, Partner, Kailasa Capital Advisors
-Combine intraday and positional options trading to diversify risk. Explore different setups to adapt to market conditions.
-Traders focusing solely on index options should consider exploring equity options, particularly for positional trading
-Monitor exposure and risk carefully, both for overnight and intraday positions.

Preeti K Chabra, Founder, Trade Delta
-With new regime taking place in derivatives market, lesser number of contracts available, volumes have drastically reduced. In this case, a cautious approach is required because of the unknown premium behaviours.
-Traders need to adapt and create new trading approaches since the market environment has changed. Like Theta decay is not linear now. This decay isn’t happening as steadily as before, making it harder for sellers to profit reliably from time-based value loss.
-In 2025, discretionary and algo options traders have to buckle up and develop new methods of trading - the older seems to have become obsolete and not working as ROI has reduced drastically with fewer contracts and increased margin requirement to work with.

Pallavi Gandhi, AVP Operational Risk with a leading credit bureau
-Have a stop loss in play to limit the losses. Have a defined stop loss as per the risk of yours. Do not use stop losses of some expert who is having more liquidity and more margin. You should know what losses you can take.
-Do not take loans to enter into derivatives trading.
-Avoid WhatApp groups, which state about quick bucks. Various WhatsApp group give one or two trading calls, which gives good returns. Then money is sought by these WhatsApp groups with a statement that they will invest and give high yield returns. They will send links to do the payment or share UPI details to pay the money. These are called pig butchering scams. Money is scammed from retail investors.

Rupak De, Senior Technical Analyst, LKP Securities
-Traders should prioritise risk management through smaller positions, stop-losses, and hedging.
-Key strategies include understanding SEBI’s rules, exploring spreads and covered calls (selling call options while simultaneously owning the underlying stock.) This will earn premium income but limits potential upside gains.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.