How retail traders drive record options volumes

October 23, 2025

Retail investors are rapidly transforming options markets once dominated by institutions. According to the Options Clearing Corporation’s 2024 Annual Report, traders executed more than 12 million contracts last year—a record-breaking figure.

The momentum shows no sign of slowing, with over 6 million contracts already traded by mid-2025. What was once a niche instrument for professionals is now being actively explored by a new generation of digitally empowered traders.

Devexperts, which develops software for capital markets firms, recently delved into how retail traders are changing options markets.

The path to this shift can be traced back to several major developments in the past decade. The most significant was the arrival of commission-free trading. When Robinhood launched in 2013, it disrupted the brokerage landscape by offering zero-commission trades aimed at younger, tech-savvy investors. By 2019, major incumbents like Charles Schwab, Fidelity, and TD Ameritrade had been forced to follow suit, removing trading fees to stay competitive. This democratisation of access laid the foundation for retail participation in more complex products like options.

At the same time, financial education became widely available beyond traditional brokers. Platforms such as YouTube, Reddit, and Discord created a new ecosystem of self-taught traders. Tutorials on reading charts, managing risk, and using derivatives helped cultivate an informed and ambitious community. In just a few years, social media succeeded where financial institutions had struggled—creating a generation eager to experiment and apply theory to live markets.

The power of these online communities became apparent during the pandemic, Devexperts highlighted. Retail traders coordinated through social platforms to target heavily shorted stocks like GameStop and AMC, purchasing deep out-of-the-money call options. Their collective actions triggered a dramatic short squeeze that shocked institutional investors. Although reminiscent of Japan’s “Mrs Watanabe” effect in forex trading decades earlier, this marked the first time options were used at scale to move underlying markets.

Another catalyst for retail activity has been the rise of zero-day-to-expiration (0DTE) options, Devexperts explained. Initially limited to quarterly or monthly expirations, these products expanded in 2005 when the CBOE introduced weekly expirations for SPY options. In 2022, daily expirations made 0DTE trading possible every day. Today, such trades represent around 43% of daily options volumes, with retail investors accounting for over half of short-dated contracts, according to the New York Stock Exchange.

This surge of retail participation has had profound market effects, it said. Increased trading has boosted liquidity, especially in short-term contracts, improving price discovery and tightening spreads. Yet, it has also introduced higher volatility and unpredictability. Retail traders’ diverse motivations and unconventional strategies often disrupt institutional models that once reliably forecasted market moves.

However, retail behaviour remains somewhat predictable in its patterns. Data shows spikes in 0DTE trading volumes at regular intervals throughout the day—often corresponding to automated retail strategies triggering around round minutes like 10am, 10:30am, and 2pm. Such behaviours, while uncoordinated, create exploitable opportunities for professional traders armed with real-time analytics.

For institutions, the influx of retail investors presents both challenges and opportunities, it said. While market noise has increased, sophisticated firms with superior data and execution capabilities can profit from these inefficiencies. The key lies in understanding sentiment and grouping traders based on behaviour and risk profile.

For more insights, read the full story here.