Retail traders shift from meme stocks to crypto, leveraged trading; options trading hits 62% retail share

Retail-driven speculative frenzies that once dominated headlines have dimmed as meme stocks lose their novelty, with investors pivoting to new high-risk arenas like crypto and leveraged currency trading. This shift reflects a maturing market where retail participation has evolved from disruptive force to routine activity. “We’ve normalized memeing,” said Peter Atwater, an adjunct professor at the College of William & Mary who studies retail investors. “There’s a yawn to it now” [1].

The week’s volatile swings—Opendoor Technologies Inc. surging 43%, GoPro briefly spiking 73%, and Krispy Kreme rallying 39%—highlighted the enduring appetite for short-term bets. However, these moves no longer draw the same level of media or institutional scrutiny they once did. By week’s end, the S&P 500 closed at a record high, underscoring broader market stability despite retail-driven turbulence [1].

The normalization of speculative behavior is evident in the tools retail traders now wield. Short-dated options, including those with 24-hour expirations, accounted for 62% of S&P 500 options trading in the first quarter, according to Cboe Global Markets Inc. More than half of that activity is driven by retail investors [1]. Amy Wu Silverman of RBC Capital Markets noted that this generation’s familiarity with options contrasts sharply with prior decades, where “buying a house” was the primary investment mantra [1].

While meme stocks like GameStop and AMC were once symbols of anti-establishment finance, the latest wave of targets—such as Kohl’s Corp. and Beyond Meat Inc.—has become a “cultural rerun,” Atwater said. He likened the shift to “30-year-olds dancing to music 20-year-olds used to party to” [1]. Meanwhile, more aggressive traders are migrating to riskier frontiers, including leveraged ETFs, prediction markets, and crypto. Michael Saylor’s strategy secured $2.8 billion in funding to expand Bitcoin purchases, while crypto funds saw a record $12.2 billion inflow over four weeks [1].

The current cycle also diverges from the 2021 meme stock surge. This week’s rallies were shorter-lived, lasting one or two trading days, and lacked the coordinated options campaigns that fueled earlier episodes. In 2021, 50% of the S&P 500’s top 100 stocks exhibited inverted one-month call skews—a bullish indicator. This week, the figure peaked at 21% [1]. Garrett DeSimone of OptionMetrics attributed this to improved risk management by market makers and institutions, who now “know how to price these options across scenarios” [1].

Competition for speculative capital has intensified. A Goldman Sachs basket of heavily shorted stocks rose over 60% since the post-Liberation Day selloff, while CCCs—the riskiest junk bonds—posted a seventh week of gains [1]. The US leveraged-loan market saw one of its busiest weeks on record as junk-rated companies restructured debt. Yet, these trends underscore a broader reality: retail investors are no longer outliers but a structural feature of modern markets.

Jay Woods of Freedom Capital Markets emphasized that retail participation is “bullish” and unlikely to wane. “This is not significant of a top,” he said, noting that the phenomenon reflects enduring demand for involvement rather than a cyclical peak [1]. The transition from meme stocks to crypto and leveraged products illustrates how retail traders are adapting to a financial landscape where innovation and accessibility drive participation.

Retail-driven speculation, once seen as a post-pandemic anomaly, is now embedded in market dynamics. As investors chase returns across asset classes, the line between retail and institutional behavior continues to blur—a trend that shows no signs of slowing.

Sources:

[1] [Meme-Stock Roar Fades on Wall Street as Retail Finds New Thrills](https://fortune.com/2025/07/26/meme-stock-trading-opendoor-krispy-kreme-gopro-crypto-prediction-markets/)

[2] [Bloomberg - Business News, Stock Markets, Finance](https://www.bloomberg.com/)

[3] [Yahoo - Jim Cramer Says: “Don't Be in a Hurry to Buy Lam Research”](https://finance.yahoo.com/news/jim-cramer-says-don-t-033033439.html)