Retail traders employing advanced quantitative strategies are increasingly influencing financial markets in unexpected ways. While critics argue that such do-it-yourself investing poses risks to individual investors and market stability, evidence suggests otherwise. In an era dominated by the rise of passive investing, retail quant trading is emerging as a counterbalance that enhances price discovery and diversifies market participation. At a recent Options Industry Conference, Henry Schwartz, vice president of market intelligence at Cboe Global Markets, highlighted significant volume spikes in zero-day-to-expiration options for the S&P 500 Index, driven by small retail orders. These ultra short-term contracts, favored by retail quantitative traders, now account for the majority of S&P 500 options trading volume and often exceed half of the total trading activity in the index itself. If retail quant trading can influence the S&P 500, similar effects may be occurring across other major markets.
— new from Bloomberg