Retail Option Buying Returns to Meme-Stock Fever Pitch
Wall Street Journal reporting published October 12 says trading in options tied to individual stocks has returned to volumes last seen during the 2021 meme-stock mania — roughly $700 billion of notional volume a day, according to Carrick Lane, an investment manager specializing in options strategies. Prices of call options, which give the holder the right to buy, have moved beyond the levels of that period. The difference this time is that the frenzy is not concentrated in a single ticker such as GameStop; it sits in the broad, continuous flow of the listed options market.
Market infrastructure numbers point the same way. Cboe said U.S.-listed options averaged 72.8 million contracts a day in the second quarter of 2026, up about 27 percent from a year earlier, and expects full-year volume to exceed 18 billion contracts, versus roughly 4 billion a decade ago. Zero-days-to-expiration volume is up 46.2 percent this year to more than 20 million contracts a day, and in July accounted for 66 percent of S&P 500 options volume. The options clearing corporation OCC counted 1.486 billion contracts in September, 6.2 percent above a year earlier, with ETF options up 37.9 percent to 642.1 million while equity options fell 13.9 percent.
Citadel Securities said its retail customers traded about $6.8 billion of options premium per day in June, 65 percent above the 2025 average, with nearly half of that volume in zero-day contracts — against 30 percent in 2025 and 13 percent in 2021. The plumbing keeps expanding: Robinhood has announced a move from 24/5 to 24/7 equity trading and a 35 percent expansion of its options hours, and BTIG estimates its third-quarter options contracts ran 11 percent above consensus. Academic work on 15 paid Discord servers found that finfluencer callouts were followed within the first minute by a surge in retail buying measured at roughly 14.5 standard deviations above normal, lifting option prices an average of 3 percent before the effect faded within two hours; the median option recommended had three days to expiry, cost about $1.25 and carried roughly 30 times leverage. University of Kentucky professor Russell Jame called the activity closer to gambling than investing.
Concentration on the sell side is heavy. Research published in October found that just two firms, Citadel and Susquehanna, hold 60 percent of designated market-maker positions and buy more than 70 percent of retail option order flow. A retail option trade earns a broker roughly 40 cents per 100 shares, double the 20 cents on a comparable stock trade, so a dollar routed into options generates about ten times the revenue of a dollar in equities. On the buy side, retail's share of U.S. equity trading has risen from 10 to 15 percent before 2020 to 20 to 25 percent by 2025, touching about 35 percent during the volatile month of April 2025, according to CFA Institute. At Schwab, derivative trades made up 24.2 percent of all client trades in August, up from 22.5 percent a year earlier, while margin loan balances climbed 58 percent from year-end to $177.6 billion.
The pace is not a straight line. Citadel Securities strategist Scott Rubner reported that cash-equity volumes fell to 0.94 times their trailing one-year average in September, the lowest reading of 2026, with retail options premium at the same multiple. Overall activity now sits 26 percent below the June high, and premium has shrunk by about a third from the 1.41 times reached in June; Rubner expects an October reload as earnings season begins. Regulators have so far stayed with guidance rather than new rules: the SEC and FINRA continue to warn that most retail options traders lose money, and FINRA Rule 2360 requires brokers to approve options accounts by customer qualification. The next tests arrive with Robinhood's third-quarter results on October 27 and with whatever earnings-season volatility does to demand for same-day expiry contracts.