Retail traders employing advanced quantitative strategies are beginning to have a significant and noticeable impact on financial markets. While some critics argue that such do-it-yourself investing could lead to disaster for individual investors and destabilize markets, this trend may actually serve as a stabilizing force. In an era where passive investing is growing rapidly, retail quant trading can aid in price discovery and bring balance to market composition. At a recent Options Industry Conference, Henry Schwartz, vice president of market intelligence at Cboe Global Markets, highlighted large 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 volume and often exceed half of the total trading in the S&P 500 itself. If retail quant trading is influencing the S&P 500, similar effects may be occurring in other major markets.
— new from Bloomberg.com