Revision in F&O lot size: Impact on traders

The Indian derivatives market has just witnessed a significant change. SEBI has now, in accordance with the December 2025 mandate, announced a change in the lot size of Futures & Options (F&O) for all.

Whether you are a seasoned option writer or a beginner trader, these changes are set to impact your margin and risk/reward calculations in a big way. So, let’s dive in and find out all about it!

At a glance: The 2026 lot size revisions

The main goal of this update was to standardise the notional value of contracts. Most index and stock lots are now set within the ₹15–20 lakh range.

Why the change? 

The retail participation in F&O has increased significantly over the past few years. According to SEBI statistics, many individuals were losing money due to excessive leverage.

• Risk Mitigation: Since the lots are smaller, there is less risk of losing all the money on a single Nifty contract.
• Hedging: With this new structure, institutions can hedge more accurately.
• Market Stability: SEBI wants to stabilise the market by reducing the size of the trades on expiry days.

Your go-to strategy 

The previous rules for position sizing are no longer relevant. Here’s how to adjust:

• Re-calculate Your Unit: If you are used to trading 2 lots of Nifty (50 lots in old days, 25 lots recently), your 2 lots are now significantly lower (30 lots). If you want to maintain the same exposure to the market, try increasing the number of lots, provided you can afford to do so.
• Margin Efficiency: The new lot size of Nifty is now 15, due to which the margin per lot has reduced significantly. You can retain more cash in your account to deal with downturns. However, don’t fall into the trap of excessive trading due to this additional margin.
• Focus on Liquidity: During this transition period, some mid-cap stock options might face a wider spread. Hence, Trade ‘At-the-Money’ (ATM) or slightly ‘Out-of-the-Money’ (OTM) strikes where the stock futures volumes are high.
• Update Your Algos: If you are an avid user of ‘basket orders,’ update the values of your multiple orders. A ‘Buy 10 Lots’ command is not the same as it was in 2025.

Conclusion

The 2026 revision is a step toward a more organised market. It treats F&O less like a high-stakes game and more like a professional hedging tool. For disciplined traders, this is a win; it offers better control over risk and more flexibility in strategy development.