Retail deleveraging signals headwind for tech stocks, JPM warns

Investing.com -- Retail investor leverage in options and margin accounts is retreating from extreme levels, presenting a potential headwind for technology stocks, JPMorgan has warned in a note examining leverage trends across investor types.

Analyst Nikolaos Panigirtzoglou said retail options activity, proxied by exchange-traded call option buying among customers with fewer than 10 contracts, peaked on June 5 at close to 14 million contracts, matching previous highs seen in October 2025 and November 2021.

"Following these previous peaks, tech stocks saw a multi-month correction," the analyst wrote, with capitulation coinciding with readings of between 2 and 4 million contracts.

JPMorgan also flagged U.S. individual investor margin account leverage as sitting "at extreme levels by historical standards," with tentative signs of retreat in recent months.

The bank noted this year's peak matches levels seen at the end of 2021 and mid-2018, "both of those previous episodes having been followed by multi-month correction in equity markets."

Risk parity funds showed clearer signs of deleveraging, with JPMorgan's implied leverage proxy retreating in recent weeks after reaching its highest level in over a decade in mid-May.

Signs of peaking in hedge fund and bank leverage were described as "more tentative."

On the economic side, JPMorgan offered reassurance, noting that both corporate and household leverage have been declining since the pandemic, "thus posing little vulnerability to macro shocks."

The bank flagged leveraged ETFs, with $247 billion in assets under management globally and a predominantly tech focus, as a key amplification force for tech stocks in recent months.

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