“’Some of it is the FOMO [fear of missing out],’ says Garrett DeSimone, director of Quantitative Research at OptionMetrics. ‘People see stocks like Tesla and Apple going through the roof, and they hear about people making money in call options.’

Options trading is part of a trend to democratize investing, giving more power to retail investors. Yet the surge in options trading is also adding volatility to the markets. Even for investors who stick with stocks and funds, knowing the dynamics of—and the risks in—options trading is critical to understanding today’s market.

Retail investors often gravitate to short-dated, lower-priced options that are out of the money, meaning that the stock needs to appreciate quickly for an investor to make money. These options often amount to lottery tickets, DeSimone says.”

Read the full Barron’s article, ‘How the Little Guy Is Fueling the Stock Market’s Wild Ride,’ featuring OptionMetrics’ Garrett DeSimone below.