‘People lose when options are used for speculation’

Sundar, who talks about futures & options (F&O) trading on various social media platforms,  tells Mint that retail investors should not believe stories of people making it big solely through trading income.

Edited excerpts from an interview:

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There is so much talk about F&O trading by finfluencers on social media. Do you have any word of caution for retail investors?

There are two types of options. There is option buying and option selling. Most retail investors end up buying an option based on certain tips they get from various sources. And, invariably, they end up losing money over a longer period of time. This is because option buying is for the purpose of hedging, but people have made it a game of speculation.

So, when hedging becomes speculation, people lose. Besides, there is time decay in options buying, so passage of time works against them. I have not come across anyone who has made big money in option buying. So, retail investors have to be extremely careful.

I would say option selling is equally risky, but then sometimes the probability of profit is quite high for the option seller. It is only probability, not certainty, but then there is also some probability of losses, though it may be quite small. The same loss can be much more than the profits they may have made in past 10 trades.

Many influencers, including you, sometimes share pictures of your lifestyle. Will this not send a wrong message to retail investors?

There is a thin line between inspiration and show-off. If a rich person posts a picture of a car bought with his parents’ money, it is flaunting or show-off. I put my pictures because I come from a very poor family background. So, if somebody coming from a poor family background also shows he has enough skills, it can be a source of inspiration. But it doesn’t mean that everyone can make it or only do so through trading. At the end of the day, you have to study your own strengths and weakness, and then take a call.  Secondly, most of the top influencers have other sources of income. For example, because I am a social media influencer, I get money from YouTube.  I have openly said that I have 7-8 different sources of income. If you really want to grow, you need to do that, just like any other business or listed company would have multiple sources of income.

What has been your journey?

I come from a poor family background. We were eight children in a poor household in Chennai. I was put up in a charitable trust hostel when I was very young. Much later on, I became a school teacher in Gujarat.  There I learnt a little bit about stock market from my Gujarati friends. I was in Gujarat between 1987-1993. Those days, there was no options market in India, only futures market. Then I went to work as a teacher in Singapore, where I made a sizeable amount of money.  This capital I used for trading in options. That’s why people should not simply believe when someone says I made ₹5 crore from ₹5,000. You need a large capital for that, to begin with.