Source: Zhitong Finance
US retail investors have relapsed into the meme stock boom.
As the Federal Reserve sends encouraging signals,$GameStop (GME.US)$Profitability is expected and stock prices are high, and retail investors in the US have relapsed into the meme stock boom.
Individual investors' options trading volume rose slightly as traders bought call options to cope with the continuing rise in stock indexes that already had bubbles. They snapped up the one that just went on sale$Reddit (RDDT.US)$The stock also bought classic meme stocks such as Game Station, causing Game Station's stock price to soar 15% on Monday and push Bitcoin to a new high.
Vincent Deluard, head of global macro strategy at STONEX, said: “An appropriate time to compare is summer 2021.” “At the extremely dovish US Federal Reserve meeting last week, we were given a signal to remove the alarm, which was the icing on the cake.”
With$S&P 500 Index (.SPX.US)$It hit 20 new highs in less than three months this year, and institutional traders haven't completely stopped trading. However, demand for put options is slightly higher than a month ago, as technical strategists are increasingly skeptical about a further rise in the stock market. For many Wall Street forecasters, such a high valuation indicates that a pullback is imminent. But for many retail traders, that means it's time to go all out.
On Monday, with GameStop's rebound, Reddit and$Trump Media & Technology (DJT.US)$Shares of the two social media platforms have also risen by around 30%. The options activities for these three stocks are all dominated by small transactions, which indicates that individual investors are involved.
On Tuesday, GameStop's options contract trading volume hit a record high since the beginning of the year. Investors are preparing to wait for the company's earnings report after the US stock market. However, the company's stock price plummeted by about 18% in after-hours trading because financial reports showed that GameStop's sales and adjusted earnings per share were lower than expected.
Also on Monday, Trump Media (then named after the blank check company Digital World Acquisition Corp) recorded the second highest number of options transactions in the year, after last Friday's trading volume. Reddit options launched on Monday attracted around 90,000 contracts, with the number of bullish contracts surpassing bearish contracts. The total volume broke through this level just three hours after opening on Tuesday.
Options “are a simple form of speculation for them,” said Bret Kenwell, an American options investment analyst at eToro Group, who has noticed retail trading activity over the past few trading days. “The worst case scenario is that they lost their option fees. In the best case, they can pay back several times over.”
The trend at the beginning of this week is in line with the trend for the whole year. This is a warning to Federal Reserve Chairman Powell that maintaining high interest rates for a longer period of time has not deterred speculative buying. According to J.P. Morgan's share of total options trading volume hit a record high earlier this year, and has only declined slightly in recent weeks. According to data from Options Clearing Corporation, investors' excitement drove intraday options trading volume to a record high in February.
A similar situation has also occurred in the digital asset sector, where Bitcoin has risen around 65% since the beginning of this year. ranging$Robinhood (HOOD.US)$und$Coinbase (COIN.US)$Cryptocurrency-related stocks, including those, have also risen.
Meanwhile, institutional traders also showed slight signs of caution. Although demand for downside hedging declined this week, the price of put options rose slightly in early March as the Chicago Board Options Exchange Volatility Index (VIX) rebounded from a low at the end of last year. Overall, however, market sentiment remains very positive.
But even in the face of widespread market optimism, the hype from US retail investors is still remarkable. Brent Kochuba, founder of the options platform SpotGamma, said retail traders currently seem satisfied with enjoying the “party environment”.
“It's like a chair-grabbing game,” he said. “The music will go on until it stops.”
Editor/jayden