This article is part of the FT’s Runaway Markets series.
The frenzied battle between amateur investors and hedge funds pushed trading volumes on Wall Street past a peak set at the height of the financial crisis in 2008.
More than 24bn shares changed hands in the US on Wednesday, exceeding the high in October 2008, according to data from FactSet.
That was matched by a record 57m options contracts traded, surpassing the 48m record set at the onset of the pandemic, data from clearing house Options Clearing Corp showed.
The trading boom is the latest sign of how day traders, equipped with commission-free apps, are wielding a growing influence over global financial markets and forcing professional investors including hedge funds into retreat.
Membership of Reddit’s r/WallStreetBets community, where amateur investors gather and share tips, has exploded in recent days. Between Wednesday and Thursday this week, the number of users rose from 2.8m to 4.3m, with about 316,000 people announcing on the platform that they were buying options, up from a little more than 60,000 on Wednesday.
According to data from OCC, the most actively traded equity options on Wednesday were in Nokia, GameStop, Palantir and BlackBerry — four stocks frequently discussed on Reddit.
More than 90 per cent of options in Nokia were call options, which give the holder a right to buy a stock at a certain price if it rises, and daily volume was up 1,800 per cent.
The fevered trading has spread around the world. On Thursday, shares in a small Western Australian mining company GME Resources — which bears a similar ticker to the New York-listed GameStop at the centre of the phenomenon — rushed 50 per cent higher before easing back to a 13 per cent gain.
The chief executive of Monex, one of Japan’s largest online brokerages, said Japanese retail investors had been particularly enthusiastic participants in the recent buying frenzy on GameStop shares. “The interest in US stocks was growing from 2019 but since Covid, we saw a huge inflection point,” said Oki Matsumoto.
Rakuten Securities, another Japanese broker, said the number of individual domestic investors who had bought GameStop shares using its platform increased 15 times between last Thursday and Monday.
Shares in a growing list of companies have been roiled by a horde of amateur investors organising on message boards such as r/WallStreetBets.
GameStop surged 135 per cent on Wednesday with 11m shares trading hands, while other groups that have struggled in recent months, such as home goods seller Bed Bath & Beyond and confectionery maker Tootsie Roll, also rallied.