'Crazy levels of gambling': Nithin Kamath shocked by US market mania, calls Indian trades 'sane'

India may now lead the world in the number of options contracts traded, but in terms of actual money at stake, it still trails far behind the United States.

Zerodha co-founder Nithin Kamath, posting on X, highlighted this stark divergence, calling India’s markets “so sane” compared to what he described as the “crazy levels of gambling and speculation” prevalent in the U.S.

Kamath’s comments accompanied a data chart comparing India and the U.S. on two critical metrics: options contract volume and premium turnover. The data shows that India trades about ten times more options contracts than the U.S., a milestone that confirms India’s rise as the world’s largest options market by volume.

 This surge is driven by explosive retail participation and a structure that allows for frequent expiries. 
However, the picture shifts when looking at premium turnover—the actual money paid to buy these options.

Despite its enormous volume, India’s options premium turnover in March 2024 stood at ₹12.5 trillion, or approximately $150 billion. In contrast, the U.S. posted $598 billion in the same month. The red bar for the U.S. in the chart is significantly larger, underscoring the fact that American options contracts command far higher premiums.

Kamath interprets this as evidence that India’s options market, though booming, remains shallow in monetary terms. He noted that Indian trading is characterized by high-frequency, low-premium activity. A large number of contracts are exchanged, but each trade involves relatively small amounts of capital. In contrast, the U.S. options market sees fewer trades but with much larger sums at stake, driven by deeper institutional participation and higher-value positions.

He also cautioned that the comparison between Indian and U.S. derivatives activity misses other major sources of speculation in the American market. “Outside the exchange-traded derivatives,” Kamath wrote, “people can gamble on leveraged ETFs (these are massive), crypto, prediction markets like Polymarket, sports betting and other things.” These alternative vehicles, he argued, amplify the speculative intensity in U.S. markets far beyond what exchange-traded data captures.

The takeaway, Kamath concluded, is clear: while India’s options boom is significant in scale, the market remains relatively measured in value. “When you look at what’s happening in the U.S. and then look at India,” he wrote, “our markets look so sane.”