Retail Investors' Put Options Buying Volume Surges in US Stock Market, Defense Demand Rises but Continued Dip-Buying in Tech Stocks

BlockBeats News, August 19th. According to Vanda Research, a research firm, data shows that since April this year, retail trading behavior in the US stock market has notably shifted towards defense. Despite a decrease in total direct stock purchases, the volume of bought put options for the 12 most popular stocks among retail investors, favored until 2026, has nearly doubled compared to the first quarter; the proportion of the option purchase amount to the net cash purchase amount has also increased from about 26% to 110%.

Kaidi Meng, Vanda's global stock strategist, stated that unlike the almost indiscriminate "buying the dip" of the past, retail investors this year have become more selective, rapidly rotating between stocks or buying protective put options while purchasing individual stocks. Since mid-April, the trading activity of bullish Technology ETFs has decreased by about 50%, while the bearish ETFs have decreased by about 35%, indicating a contraction in overall long market exposure.

However, data from Stax Financial shows that retail investors have not entirely turned bearish. In July, the number of buyers on its platform still exceeded sellers by twice, and the STAX trading activity index rose from 59.12 in June to 59.80, reaching the highest level since January 2022. Retail investors continued to buy high-volatility popular stocks during the tech stock pullback, and funds also rotated from Nvidia to other assets.

Joe Mazzola, Stax's Chief Trading and Derivatives Strategy Officer, mentioned that some investors are selling put options of Nvidia, Micron, and SanDisk to earn option premium, while also moderately increasing their holdings of low-cost QQQ put options to hedge against broader downside risks in the tech sector. He believes that the current defensive actions in portfolios are noticeable but not aggressive.