How crazy is the market? Google’s “intraday trading” and “call options” searches surge

U.S. stocks have rebounded sharply from Their March lows as the economy suddenly improved. The Nasdaq composite has broken through 10,000 for the first time in history, a record high, while the Standard and Poor’s 500 index is close to wiping out year-to-year declines. Behind the frenzied rise in the stock market, there are signs that investor frenzy is everywhere.

Original title: How crazy is the market? Google’s “intraday trading” and “call options” search volume surges!

Searches for “day trading” and “call options” have exploded in recent weeks, soaring to unprecedented levels, according to Google Trend data.

Data on the network, it seems to confirm that in the current hot U.S. stock market, retail driving “can not help.” One reason for the stock market’s surge may be the aggressive speculation of retail investors, who are bullish on venture capital with less money.

Commission-free trading and so-called “fragmented trading”, the inability of people to go out of the country, and even the government’s cash checks to Americans have contributed to the surge in retail investors.

A report released last month by Envestnet Yodlee, a software and data processing company, showed that trading in stocks in the week after the annual income of 35,000 to 75,000 Americans received a check for the affected benefits jumped 90 percent. Envestnet Yodlee’s data is based on bank account transfer information for 2.5 million Americans who received the affected checks.

Some of these retail investors are flocking to stocks that have been hit hard by the new corona virus pandemic, such as airlines and cruise carriers. Other retail investors are snapping up shares in bankrupt companies, such as Hertz and J.C. Penney) and so on. Others prefer stocks worth less than $1, according to Citadel Securities.

John Ham, an assistant investment adviser at New England Investment and Retirement Group, says some of the stocks that have been soaring in recent prices have been purely buy-to-let. The frenzied buying of shares has a huge impact on individual trading, particularly aviation stocks, cruise ship stocks and low-priced stocks.

“It’s all like a retail rush, and it’s reached the peak of the blowout. Citadel Securities wrote in the report.

In the stock and options markets, the proportion of trading volumed by small deals has risen rapidly over the past three months, according to Goldman Sachs strategists. The data supports the view that active trading by individual investors plays an increasingly important role in market volatility, particularly in selected stocks.

The Goldman Sachs survey shows that while sentiment is now much better than before, there are few professional investors who are really bullish. By contrast, young retail investors are very active in individual stocks trading, the highest level since the tech bubble in 2000. Shares traded under $2,000 in a single transaction have increased significantly as a percentage of total U.S. stock turnover, from 1.5 percent at the start of the year to 2.3 percent today.

This is also evident in the US stock options market, where the share of total options traded on only one option contract has risen from less than 10 per cent in February to 13 per cent today. Moreover, there are far more bullish contracts than bearish contracts.

Although the amount of capital of a retail investor may be much smaller than that of the institution, but do not ignore the “fish effect”, a sufficient number of retail investors can bring the market a very large amount of capital, can have a certain impact on individual stocks, especially those with relatively small number of shares in circulation, small market size.

How long will the “all-out carnival” of the stock market last? Will retail investors who have just entered the market become “catchers” after the share price climbs to a high level? Let’s wait and see!