Retail Investors Return to Risk as Single-Stock Options Surge

what happened

Newsmetry API, citing The Wall Street Journal, reports that individual investors are again trading single-stock options at a rapid pace. Daily notional volume has recently reached about $700 billion, matching levels seen during the 2021 meme-stock frenzy. Call-option prices have also moved above the levels recorded then. More than half of current single-stock options activity is concentrated in contracts expiring in less than two weeks, according to Carrick Lane partner John Marshall.

Strong corporate earnings and enthusiasm for artificial intelligence are helping sustain the bullish mood. The share of individual investors expecting stock prices to rise over the next six months reached 40.3% in the week ended Oct. 7, the highest reading since mid-July and comparable with 2021, according to the American Association of Individual Investors. FactSet expects S&P 500 companies to post roughly 30% year-over-year earnings growth in the third quarter and 33% growth for 2026.

Retail traders have become somewhat more selective in 2026, favoring a handful of high-conviction names. Activity slowed over the summer after a rally in memory stocks and chip makers peaked in June, but Citadel Securities data indicate that seasonal October strength could bring traders back. Charles Schwab clients most frequently bought an ETF tracking the Dow Jones U.S. Dividend 100 Index in September and also purchased ETF-linked call options. On Monday, the Dow Jones Industrial Average rose 0.4%, while the S&P 500 slipped less than 0.1% and the Nasdaq Composite fell 0.4%.

why it matters

The renewed appetite for short-dated options indicates that retail investors remain willing to take substantial risk despite higher interest rates, $100 oil and war in the Middle East. That may keep trading concentrated in technology and AI-related names while increasing sensitivity to sharp market swings.

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