Regular people are using the options market for safe, low-risk bets instead of just gambling for a huge payday.
March 26, 2026
Original Paper
In the Money? Low Leverage Option Betting
SSRN · 6344498
The Takeaway
The common narrative is that retail traders use options to gamble on risky, cheap 'out-of-the-money' contracts. Instead, this data shows a massive trend of small players buying expensive 'In The Money' options as a practical way to gain exposure to high-priced stocks they couldn't otherwise afford to buy.
From the abstract
This paper studies low leverage derivatives in options markets by focusing on In The Money (ITM) contracts. Using a comprehensive open-close dataset covering 70 percent of equity option activity, I show that small customers allocate substantial capital to long ITM call positions when exposure is measured in dollar terms. I provide suggestive evidence that retail investors drive demand for ITM options. Trading activity in ITM contracts co-moves with retail social media attention, these positions