“Retail investors may also be changing how they act. Data from OptionMetrics shows that the share of index option trading from retail investors rose from 20% to 30% of all volume between January and August. The data provider uses single-lot sized trades as a proxy for retail activity.

OptionMetrics’ head of quantitative research Garrett DeSimone says most of the activity is buying out-of-the-money index puts, which suggests retail traders are switching from bets on the good fortune of individual companies to broader bets on market-wide falls. He believes the uptick could be the start of a “new paradigm” in which a heightened presence of retail traders in index options would lead to elevated implied volatility in these types of instruments as well as in single-name options.”