[NEW YORK] It was once a symbol of rebellion against the well-heeled Wall Street establishment. Today, it’s just another day in markets.
This week proved the point. Opendoor surged 43 per cent in a single day. Krispy Kreme rallied 39 per cent in a matter of hours. GoPro briefly spiked 73 per cent. Reddit message boards lit up once again with rocket emojis and call-option bravado.
Yet it was not the magnitude of the surges that mattered, but the indifference they met. Customary warnings about speculative excess fell on deaf ears. What once felt seismic now feels like a normal part of daily trading, another episode in a US financial system where bursts of retail speculation are routine, expected, and largely unremarkable.
By the end of the week, with the quick rallies faded, the broader market ended with modest moves after a record-setting run. Meanwhile, crypto – once cast as the financial resistance – continued its steady march into the mainstream. A new blockchain-based project involving the likes of Bank of New York Mellon and Goldman Sachs was announced. Crypto funds posted their biggest four-week cumulative inflow ever.
Michael Saylor’s Strategy clinched another US$2.8 billion in capital markets to fund additional Bitcoin buying.
Taken together, the week offered a broader lesson: retail-driven speculative behaviour no longer signals generational angst or post-pandemic distortion. It has instead become a settled feature of the current cycle. Short-dated options are part of the retail toolkit, trading platforms span everything from sports betting to complex stock bets, and manic episodes rarely require justification to take hold.
Peter Atwater, an adjunct professor at the College of William & Mary who studies retail investors, said the current wave of activity reflects a shift in both market sentiment and investment toolkit. Meme stocks trading, he says, has lost its sense of novelty – and that’s precisely the point. “We have normalised memeing,” he said. “There’s a yawn to it now.”
In Atwater’s view, the most aggressive traders have already moved on to riskier frontiers – digital tokens, leveraged ETFs, prediction markets, while meme stocks have become more of a cultural rerun. “It’s like 30-year-olds dancing to music 20-year-olds used to party to,” he said.
That meme stocks can rip without stimulus checks, lockdowns or zero rates is not especially surprising anymore. It is, in its own way, a marker of the moment: everyday speculation, embedded in the architecture of modern markets. Contracts that expire within 24 hours made up a record 62 per cent of the S&P 500’s total options so far this quarter, according to data compiled by Cboe Global Markets, with more than half of the activity being driven by retail trading.
“This generation is far savvier about options and market structure,” said Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets. “While my generation was perhaps taught to ‘buy a house’ this one knows to ‘buy the dip.'”
It’s not happening in a vacuum. This week’s earnings season offered few surprises. Tariff deadlines slipped again. Noise from the White House blurred into the investment backdrop. The S&P 500 climbed 1.5 per cent on the week and closed at a record high.
And in the end, a group of volatile stocks became yet another playground where regular investors aimed to quickly turn a profit, often by cornering short sellers or leveraging options. Opendoor Technologies capped a six-day winning streak with a 43 per cent pop on Monday. The following days saw stocks with high short interest, such as Kohl’s, GoPro, Krispy Kreme and Beyond Meat surge intraday then pare into the close.
Competition for gambling US dollars is more brisk than it used to be. Since the post-Liberation Day sell-off, a Goldman Sachs basket of the most shorted stocks has jumped more than 60 per cent. In credit, CCCs, the riskiest tier of the junk bond universe, are on track to rack up a seventh week of gains. Crypto funds took in US$12.2 billion in the past four weeks, their biggest cumulative inflow for such a period, according to Bank of America, citing EPFR Global data. The US leveraged-loan market just had one of its busiest weeks ever with junk-rated companies rushing to reprice their borrowings multiple times.
And while the latest frenzy was reminiscent of 2021’s pandemic-era burst, there were a few key differences. This week’s action was fleeting, lasting one or two trading days before petering out. Concerted campaigns in the options market played a smaller role. More than half of the top 100 stocks in the S&P 500 index were trading with inverted one-month call skew in 2021, a sign of bullish intent, according to Cboe. This week it got only as high as 21 per cent for the group.
“The market makers and institutions have really adjusted to this phenomenon,” said Garrett DeSimone, head quant at OptionMetrics. They are “able to hedge their risk and they know how to price these options in across these scenarios”, he said.
If it signalled anything, enthusiasm for memes is more evidence that an ever-more-empowered retail cadre is a fact of Wall Street life that is not going anywhere, at least not soon.
“I don’t think it’s the beginning of a new trend, but it is very interesting to watch because it speaks that the retail investor really wants to be involved in this market,” said Jay Woods, chief global strategist at Freedom Capital Markets. “This is bullish. This is not bearish. This is not significant of a top.” BLOOMBERG
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