Institutional Investors Pour $18.4B into US Stock Options, Betting on AI Amid Bond Rout

Latest data shows that institutional investors are increasingly taking the reins in the U.S. stock market.

After years of strong buying activity, retail traders appear to be gradually stepping to the sidelines. Meanwhile, according to data from Vanda Research, large investors continue to hold their positions steadily despite surging U.S. Treasury yields.

"In the face of heightened macro volatility this week, institutional investors have shown surprising resilience," Vanda Research global market strategist Viraj Patel wrote in a note to clients on Friday.

Institutional Options Inflows Surge

Data indicates that institutional investors' options capital inflows reached $18.4 billion—roughly three times the September average.

Patel noted that despite 10-year and 30-year U.S. Treasury yields climbing to their highest levels in over a decade, large capital inflows have continued to rise over the past five trading days. He described this as a "fairly constructive signal" of risk appetite hidden beneath the broader risk-off narrative.

AI Stocks in Focus Amid Market Turmoil

Patel highlighted that amid market turbulence, institutional traders are selectively positioning in artificial intelligence (AI)-related stocks.

He specifically pointed to Meta Platforms (META.US) as one of the top picks last week, which is on track to record its third-largest single-week volume of institutional bullish options buying in two years. The Facebook parent company's stock surged nearly 13% in the week following the launch of its Muse Charm device. Since Meta released its Muse personal AI agent earlier this month, the stock's upward momentum has continued to build.

Over a four-trading-day span, institutional net bullish options exposure to Meta increased by $603 million. This aggressive positioning ranked second only to Micron Technology (MU.US) across the entire market, while Meta's total call option turnover surged 243% compared to the previous week's levels.

"Macro uncertainty hasn't stopped risk-taking," Patel said. Instead, "it's making investors more selective in their stock-picking criteria."

Retail Trading Share Shrinks

Retail traders posted strong results in 2025, leading many to declare they had shed the "dumb money" label. Investors attributed part of their strong performance to buying the dip during market pullbacks triggered by tariff policies introduced by the Trump administration.

However, Goldman Sachs data shows that retail investors' share of total S&P 500 trading volume has continued to decline from its peak nearly a year ago. The bank found that this share is now more than 3 percentage points below the five-year average.