This year, individual investors have made significant gains in the high-risk derivatives market, earning over 9 trillion won in just five months. Derivatives, including futures and options, have historically been a challenging area for individual investors due to high leverage and the potential for losses exceeding the initial investment. However, with the recent surge in the KOSPI index and a rally in the semiconductor sector, many investors successfully placed long positions, leading to substantial profits.
According to data submitted by the Financial Supervisory Service to the National Assembly on June 29, individual investors recorded a profit of 9.1129 trillion won from domestic and foreign exchange-traded derivatives from January to May. This figure is approximately 5.9 times higher than last year's total profit of 1.5543 trillion won.
The profits were primarily generated from domestic derivatives. From January to May, the profit from domestic exchange-traded derivatives was reported at 9.3162 trillion won.
In previous years, individual investors struggled with domestic derivatives, posting losses for four consecutive years: 3.315 trillion won in 2021, 1.0797 trillion won in 2022, 2.226 trillion won in 2023, and 1.5111 trillion won in 2024, accumulating a total loss of 3.1449 trillion won. However, after turning a profit last year, they have now earned nearly three times their previous losses in just five months this year.
In contrast, foreign exchange-traded derivatives have continued to incur losses, totaling 203.3 billion won this year. Cumulatively, losses from foreign derivatives reached 1.9992 trillion won when combined with previous years' losses of 1.7959 trillion won.
Trading volume has also seen rapid growth. From January to May, the trading volume of domestic exchange-traded derivatives by individual investors reached 2,636.9179 trillion won, which is 82.3% of last year's total trading volume of 3,205.3759 trillion won. The pace of trading growth has accelerated compared to the same period last year.
As a result, there has been a significant increase in new individual investors entering the derivatives market. The number of individuals completing mandatory pre-training for futures and options trading reached 38,172 from January to May, surpassing last year's total of 22,387 by 70.5%. This number represents 1.7 times the annual total from last year in just five months.
Market analysts attribute the increase in derivatives trading volume and profits to the strong performance of the stock market this year. Trading in derivatives based on individual stocks has surged as well. According to the Korea Exchange, the trading amount for individual stock futures has reached 545.336 trillion won this year, approximately 4.2 times higher than the same period last year. Trading in stock options has also increased to 5.479 trillion won, an eightfold rise.
Kang Song-cheol, a researcher at Eugene Investment & Securities, noted, "Individual stock futures are a representative product that utilizes leverage, making them highly aggressive investments. This year, as the stock prices of Samsung Electronics and SK Hynix have risen significantly, a large influx of individual funds has bet on upward trends."
The expansion of the night derivatives market, which opened in June last year, is also seen as a contributing factor to increased trading. The market now operates from 6 p.m. to 6 a.m. the following day, allowing for immediate responses to movements in the U.S. stock market, greatly enhancing investment convenience.
According to the Korea Exchange, the average daily trading volume in the night derivatives market this month reached 101.8116 trillion won, a 635% increase from the average of 13.8525 trillion won during the initial opening period in June last year.
However, experts caution against excessive leverage investments based solely on recent performance. They warn that this year's profits, driven by a strong upward market and high volatility, could lead to rapid losses if market conditions shift.
A securities industry official stated, "While derivatives can yield high returns in a rising market, they can also lead to significant losses in volatile conditions. It is essential to focus on risk management rather than generalizing the successes seen during strong market periods like this year."
* This article has been translated by AI.
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