Retail investors left the market, and institutions took over! Under the US debt storm, “smart money” continues to advance: US$18.4 billion in options capital flows into US stocks, and AI is still the first choice

The Zhitong Finance App learned that the latest data shows that institutional investors are taking over the dominance of the US stock market.

After years of strong buying, retail traders seem to be slowly stepping back out of the market. Meanwhile, data from Vanda Research shows that in the face of soaring US Treasury yields, large investors are still holding stocks steadily.

“Institutional investors have shown surprising resilience in the face of increased macro volatility this week,” Vanda global market strategist Viraj Patel wrote in a report to clients on Friday.

According to the data, the volume of option capital inflows from institutional investors (US$18.4 billion) is about three times the average in September of previous years.

Patel said that although 10-year and 30-year US Treasury yields climbed to their highest level in more than a decade, the inflow of large capital has continued to rise over the past five trading days. He believes that under the broader safe-haven narrative, this is a “quite constructive signal” hidden in institutional investors' risk appetite.

Patel mentioned that in the midst of market turbulence, institutional traders are choosing to lay out artificial intelligence (AI) related targets.

He specifically pointed out that Meta Platforms (META.US) was one of last week's top picks and is expected to set the third-largest weekly record for institutional call option purchases in two years. The Facebook parent company's shares soared nearly 13% within a week after launching the Muse Charm device. Since Meta released its Muse personal AI agent earlier this month, the stock's upward momentum has continued to build up.

Over the span of four trading days, institutional net call option exposure to Meta increased of $603 million. This aggressive position allocation is second only to Micron Technology (MU.US) in the overall market, and Meta's total volume of call options surged 243% from last week's level.

“Macro uncertainty has not stopped risk-taking,” Patel said. On the contrary, “it has made investors' stock selection criteria more critical.”

The share of retail transactions has shrunk

Retail traders performed well in 2025, even making many people claim that they have gotten rid of the “fool's money” label. Investors attributed its impressive performance in part to the Trump administration's decision to buy on dips when the market pullback triggered by the introduction of a tariff policy.

However, according to Goldman Sachs data, the share of retail investors in the total trading volume of the S&P 500 index has continued to decline from a high of nearly a year ago. The bank found that the current ratio is more than 3 percentage points lower than the five-year average.