Small traders are panicking to a record degree

Small traders are showing record levels of panic (by SentimenTrader)

Last week saw some of the most volatile price action in 2 years, a barrage of nasty headlines, and a cutting in half of a near-majority of stocks on the Nasdaq.

It was enough to trigger panic among the most leveraged traders in the market.

Small options traders bought to open nearly 12 million put options last week, spending $6.5 billion for the privilege of protecting their portfolios. That's a remarkable jump in trades meant to hedge against further losses. It's 40% higher than even the worst week during the March 2020 meltdown.

Of course, this only shows one side. If they also bought a tremendous number of speculative call options or sold a bunch of put options betting that declines would be limited, then it doesn't mean a whole lot.

As a percentage of all opening option trades, small traders spent 29% of their volume on buying put options. When we look at the amount of money small traders spent on put options relative to calls, it's now the highest since April 2020.