AI Rally Pushes Retail Investors to Most Aggressive Options Bets Since Covid

CNBC reported Tuesday that retail call buying in the largest AI-linked stocks has reached its most aggressive level since the pandemic-era trading boom of 2021.

Retail Traders Chase the Rally Through Options

Cboe exchange data shows retail investors are purchasing call contracts on its so-called “Mag 10” basket at the heaviest 10-day rate in roughly five years. The basket extends the familiar Magnificent Seven to include AMD, Palantir, and Broadcom. Of all new positions opened, 52% were call purchases while only 17% involved call selling.

Cboe derivatives intelligence head Mandy Xu told CNBC the shift reflects a broad abandonment of hedging strategies. Investors are instead reaching for upside exposure to avoid being left behind by the surging market.

Also Read: Nvidia Leads Semiconductor Stocks Toward 20% of S&P 500 Market Cap

A Sharp Reversal From Tariff-Driven Caution

Just weeks ago, the picture looked very different. Cboe’s call-buying gauge sat roughly 15 percentage points lower, with investors focused on geopolitical risks and energy prices. The reversal has been swift and broad-based, mirroring the Nasdaq-100’s record-setting performance this year.

The index posted a fresh all-time high Monday and now carries a year-to-date gain exceeding 16%. Semiconductor stocks are leading the charge and are approaching 20% of S&P 500 market capitalisation.

Background: Concentrated Rally Lifts Single-Stock Volatility

The narrow, tech-heavy nature of the advance has a structural side effect. Because gains are concentrated rather than broad, options traders are directing more activity toward individual names than indexes. Cboe’s measure of single-stock constituent volatility relative to the VIX has widened to the 98th percentile, reflecting low cross-market correlations.

Nations Indexes president Scott Nations added a striking data point to CNBC’s report. The cost of out-of-the-money Nasdaq-100 calls is near a three-year high, and crucially, almost no one wants to sell covered calls against positions. Nations said that signals an unusually deep conviction that prices will continue rising.

Also Read: What Is the VIX and Why Does It Matter for Equity Markets?

Retail Platforms Confirm the Tech Conviction

Robinhood data shows its users have been consistently buying megacap tech names on dips while trimming exposure to underperformers like Costco and UnitedHealth. Robinhood chief brokerage officer Steve Quirk told CNBC that platform traders have maintained long-standing conviction in technology and innovation stocks and have used pullbacks as entry points throughout this cycle.

The pattern echoes 2020 and 2021, when stimulus-era retail investors piled into call options during a historic technology-driven melt-up.

Read Next: What Is a Call Option? A Beginner’s Guide to Derivatives