ABSTRACT Retail participation in index options markets has expanded rapidly, particularly in emerging economies such as India. Despite this growth, empirical evidence consistently shows that a majority of retail traders incur persistent losses. This study advances the literature by shifting the focus from participation viability to loss mitigation design. Using a unique dataset of 4.2 million Bank Nifty option trades (2018–2024), we quantify baseline loss distributions and evaluate the causal impact of three rule-based interventions: stop-loss enforcement, position sizing constraints, and expiry-day trading restrictions. Employing a quasi-experimental back-testing framework and robustness checks using panel regressions, we find that a bundled intervention reduces average loss severity by 47.6% (p < 0.001). However, consistent with market microstructure theory, positive expectancy remains unattainable for most traders due to embedded volatility risk premia. The findings suggest that while losses can be engineered downward, they cannot be engineered away. The study contributes to financial engineering, behavioural finance, and regulatory design by proposing actionable, system-level safeguards for retail derivatives markets.