Individual investors are once again demonstrating strong enthusiasm for risky market bets, as evidenced by a surge in options trading comparable to the levels seen during the 2021 meme-stock frenzy. Volumes of options tied to individual stocks have recently approached $700 billion in notional value per day, according to Carrick Lane, an investment manager specializing in options strategies. The prices of call options—contracts that give the right to buy a stock at a set price—have also surpassed peaks last observed during that period.
This renewed vigor among retail investors comes despite ongoing macroeconomic challenges, including rising interest rates, persistently high oil prices near $100 per barrel, and geopolitical tensions linked to conflict in the Middle East. Instead, many individual traders are focusing on strong corporate earnings and remain willing to accept the heightened volatility that characterizes current markets. According to the American Association of Individual Investors, bullish sentiment—measured by the proportion of investors expecting higher stock prices in the next six months—reached 40.3% for the week ending October 7, marking the highest level since mid-July and near figures recorded during the 2021 rally.
A significant driver behind this optimism is excitement surrounding artificial intelligence (AI) and its perceived potential to revolutionize industries and the broader economy. Kunal Berry, a 41-year-old consultant based in Los Angeles, cited gains in major technology companies such as Nvidia, Amazon, and SpaceX as evidence of this trend. Berry acknowledged the short-term volatility but emphasized the willingness to endure fluctuations given the growth prospects.
While the initial meme-stock episode faded as many favored stocks lost momentum, retail investor engagement has remained resilient and in some ways intensified over the past five years. This cohort notably continued to “buy the dip” even during the April 2025 selloff triggered by a global trade war. They also significantly contributed to the rise of new AI-focused stocks and participated actively in the SpaceX initial public offering, maintaining a strong presence in the market today.
Recent market data reflect a mixed performance on the equity benchmarks front: the Dow Jones Industrial Average increased 0.4% (approximately 196 points) on Monday, while the S&P 500 and Nasdaq Composite declined slightly by less than 0.1% and 0.4%, respectively. Another indication of investor confidence echoes 2021 patterns, as over half of single-stock options volumes now focus on contracts expiring within two weeks, according to John Marshall, a partner at Carrick Lane.
Strong corporate profits underpin much of this optimism, helping drive repeated record highs for stocks throughout the year. However, some market analysts caution that a seasonal slowdown typically occurs in October, and the behavior of retail traders will be a critical factor to watch as the year progresses.
Not all investors are embracing high-risk derivatives, though. More risk-averse clients are opting for cautious, yield-oriented strategies, with exchange-traded funds (ETFs) gaining traction. In September, the most purchased position among Charles Schwab clients was an ETF tracking the Dow Jones U.S. Dividend 100 Index—a first for such a product since Schwab began tracking client purchases in 2021. Schwab clients also increased their call option activity on ETFs during the month.
Joe Mazzola, head trading strategist at Charles Schwab, described the current retail market tone as “a little bit more cautious optimism,” noting that investors remain ready to buy on market dips but are doing so with measured prudence.