Why is F&O trading considered risky?

F&O trading is inherently leveraged: you control a contract worth significantly more than the margin you put up, which means both gains and losses are magnified relative to the capital deployed, unlike buying shares outright where your maximum loss is limited to what you paid. Time decay works against option buyers regardless of price direction, meaning even a stock that eventually moves the way you expected can still result in a loss if it takes too long to get there and the option’s time value erodes faster than the price gain. Margin requirements can change intraday based on volatility, and a position that was adequately margined can face a shortfall purely from a volatility spike, even before the underlying itself moves much. SEBI’s own data, published periodically, has repeatedly shown that a large majority of individual F&O traders lose money over time, which is part of why regulators have progressively tightened lot sizes, margin norms, and disclosure requirements in this segment. You treat F&O as a fundamentally different risk category from equity delivery investing, not a more exciting version of the same activity.