Retail investors have become a powerful force in the options market, with their share estimated to range between 45% and 60%, depending on how it’s calculated. Although their activity surged during the pandemic, it has remained strong, fuelled by the appeal of options as a versatile and leveraged instrument that supports a range of short-term and event-driven strategies.
WealthTech company Devexperts recently explored the rise of the retail options trader.
Retail traders are increasingly drawn to the features of options, which allow them to take directional positions without owning the underlying asset, hedge their portfolios, or trade on news and earnings with enhanced leverage. But arguably the biggest catalyst for mass adoption was the arrival of zero-commission brokers. Robinhood’s 2015 debut introduced a new, younger and more diverse user base to options trading, promising ease of access and affordability. By 2021, Robinhood had over 21 million monthly users, and options volumes reached nearly 10 billion contracts—an all-time high.
A Financial Industry Regulatory Authority (FINRA) survey conducted in 2021 found that 38% of brokerage accounts opened in 2020 were by first-time investors. Of these, nearly two-thirds were under 45 years old, with many starting their trading journey with less than $500 in their accounts, reflecting the democratising effect of low-cost platforms.
A key development in retail options is the rise of zero-days-to-expiration (0DTE) options. These contracts, which expire the same day they’re issued, have gained popularity among short-term traders due to their affordability and potential for fast returns. While 0DTE options first appeared in 2005, their availability expanded to all five trading days only in 2022, aligning with retail demand. By late 2023, more than half of short-dated options trades were attributed to retail participants.
The 2021 meme stock phenomenon further showcased the influence of retail options traders. Platforms like Reddit’s WallStreetBets facilitated mass coordination, as retail traders purchased out-of-the-money call options on heavily shorted stocks like GameStop and AMC. This triggered short squeezes, drove prices higher, and even led to the collapse of hedge funds such as Melvin Capital. The event underscored the collective impact retail traders can have on market dynamics.
As a result, brokerages are rethinking their offerings to accommodate this new wave of tech-savvy, collaborative traders. Modern platforms must now deliver functionality tailored specifically to options trading. This includes intuitive visual tools such as heatmaps for strike price movements, depth-of-market visualisations, and earnings-based volatility analysis—features that support retail traders’ news-driven strategies.
Risk management tools are another key requirement. Access to the full suite of “Greeks” (delta, gamma, theta, vega, rho) is essential for understanding how options respond to various market factors. Scenario analysis tools—allowing for “what-if” simulations of potential outcomes—help traders plan strategies and manage risk more effectively.
To further support decision-making, platforms need robust screening tools. Options screeners let users identify trading opportunities based on metrics like earnings data or technical patterns. Option chains should be filterable by strategy and display clear explanations of positions such as spreads, straddles and strangles, including associated risks and use cases.
As younger traders expect seamless access across devices, dedicated mobile apps and responsive browser-based platforms are also a must. Traders want full functionality whether they’re on a desktop or smartphone, and platforms that don’t offer this flexibility risk losing users to more agile competitors.
The rise of the retail options trader reflects a significant shift in both market structure and investor behaviour. Retail traders are no longer just participating—they’re setting the pace. Brokers that can deliver advanced, intuitive, and mobile-friendly options platforms will be best positioned to capture and retain this fast-growing user base.
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