Retail investors are betting big on tech stocks through call options on the Magnificent 10, a group of the largest U.S. tech companies, according to a report from Cboe Global Markets. The exchange said the aggressive buying, driven by the ongoing artificial intelligence rally, could amplify market volatility and signals a shift toward speculative behavior in the sector.
Why retail call buying matters
Call options give the buyer the right to purchase a stock at a set price within a specific time frame. When retail traders pile into these contracts en masse, it can force options dealers—who sell the calls—to hedge their exposure by buying the underlying shares. That hedging can feed into upward price moves, but when the rally stalls, the unwinding of those positions can accelerate declines.
Cboe didn't provide specific dollar figures, but the report points to a clear trend: retail traders are increasingly using call options to lever up their bets on the Mag 10 stocks. The exchange warned that this concentrated activity could amplify market swings, both on the way up and the way down.
The Mag 10 and the AI rally
The Mag 10 refers to the ten largest U.S. tech stocks by market capitalization, including names like Apple, Microsoft, Nvidia, and others that have led the broader market's gains over the past year. The group has been a focal point of the AI boom, as investors pour money into companies seen as key beneficiaries of the technology.
According to Cboe, the call option buying is occurring amid that AI-driven rally. Retail traders are chasing momentum, piling into bullish bets on the very stocks that have already climbed sharply. The report characterizes the activity as heightened speculative behavior, a label that carries weight given the potential for sudden reversals when sentiment shifts.
Volatility risk ahead
The warning from Cboe comes as no surprise to market veterans who have watched retail traders flood into options in recent years. But the concentration on a small group of high-flying stocks makes the current situation more precarious. If the AI trade loses steam—or if a broader market selloff hits—the same options positions that fueled the rally could unwind violently.
For now, Cboe's data offers a snapshot of a market where retail exuberance meets institutional caution. The exchange's report doesn't predict a crash, but it flags a risk that traders will be watching closely. Whether the speculative wave continues or fades will depend on the next leg of the AI story—and on whether the Mag 10 can keep delivering the growth that has drawn so many bullish bets.
