Bullish options bets by retail investors are on the decline, hitting their lowest level this year as market sell-off spooks day traders

• Retail investors are shying away from bullish options bets, according to a Bloomberg report.
• Among traders buying small contracts, only 43% of options volume went to bullish bets in late September, the lowest level in 2021.
• The bearish retail sentiment came during a tough month for stocks. The S&P 500 fell nearly 5% in September.

Retail investors are shying away from bullish options bets as choppy markets increasingly mean buying the dip doesn't always pay off, according to a Bloomberg report.

As the effects of pandemic-era stimulus fade from markets, retail investors have soured on high-risk, high-reward options contracts. Among traders buying small contracts, only 43% of options volume went to bullish bets in late September, according to a Susquehanna analysis cited by Bloomberg. That's the lowest level in 2021.

In the more frenzied months earlier this year, retail investors piled into call options as a way to gamble on big gains in stocks like GameStop and AMC.

The bearish retail sentiment came during a tough month for stocks. The S&P 500 fell nearly 5% in September amid what Fundstrat's Tom Lee called a "wall of worries" facing markets in a note on Monday - including the Delta variant, fears of a market peak, supply chain disruptions, and tightening monetary policy.

"I did not get the sense that individual investors are that outright enthusiastic about stocks, in the near term," Lee wrote. "Our base remains that this skepticism is healthy and the type that allows markets to surprise to the upside."

But while retail traders have pulled back on options, stock and ETF purchases remain robust. Popular stocks like Apple, Facebook, and Nvidia were the most-bought assets on Fidelity on Monday, according to Bloomberg.