Individual investors recently accounted for 27% of all options-trading activity, according to estimates from Bloomberg Intelligence. That’s below the pandemic peak of almost 30% but well above the levels in early 2020. By comparison, everyday investors recently made up 18% of all activity in stocks.
Options give traders the right to buy or sell stocks at a specific price at a later date. They can offer explosive gains—or losses. For example, put options tied to Tesla with a $225 strike price—or the level at which the trader has the right to sell the shares—changed hands for $3.38 in trading this week, according to FactSet, up from around $1.76 Friday. The shares have fallen 1.6% in the first two days of this week.
