Frenzy In F&O Trading And SEBI

Warrant Buffet in his 2002 chairman's letter for his holding company Berkshire Hathaway, while referring to derivatives, wrote, "We view them as time bombs, both for the parties that deal in them and the economic system". He further added in the same letter that, "derivatives are financial weapons of mass destructions, carrying dangers that, while now latent, are potentially lethal."

Exchange traded derivatives are standardised contracts regulated by stock exchanges under the overall superintendence of securities market regulator. Trading in futures and options (F&O) in India (equity derivatives) has seen a sharp growth since Covid-19 lockdown in 2020. Lockdown led to flock of new savvy traders trying to make a quick buck in the stock market. Options trading was taken up as a side hustle, as many individuals started working from home during lockdown. There have been instances were these individuals (salaried or already engaged in some other full-time