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FrontRow · Aug 19, 2026

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Retail investors aren't giving up on the artificial intelligence trade. But they are getting selective and adding downside protection as markets head into the fall. Investors are using put options and inverse ETFs to hedge risk while still positioning for upside in individual technology stocks, according to data from Vanda Research and Charles Schwab. Put options give the holder the right to sell an asset at a stated price by a certain date. Inverse ETFs aim to move in the opposite direction from the index they're following. "Retail investors are selectively trading in the classic AI theme but also adding downside protection via options and inverse ETFs," Vanda's global equity strategist Kaidi Meng told CNBC in an emailed statement. Retail flows look very different now compared with prior years, Meng said. "Previously, retail bought any major dips almost without question. However, this year, we are seeing a more selective retail investor that is either switching between stocks quickly or buying underlying stocks while also buying protective puts," she added.

Retail investors aren't giving up on the artificial intelligence trade. But they are getting selective and adding downside protection as markets head into the fall. Investors are using put options and inverse ETFs to hedge risk while still positioning for upside in individual technology stocks, according to data from Vanda Research and Charles Schwab. Put options give the holder the right to sell an asset at a stated price by a certain date. Inverse ETFs aim to move in the opposite direction from the index they're following. "Retail investors are selectively trading in the classic AI theme but also adding downside protection via options and inverse ETFs," Vanda's global equity strategist Kaidi Meng told CNBC in an emailed statement. Retail flows look very different now compared with prior years, Meng said. "Previously, retail bought any major dips almost without question. However, this year, we are seeing a more selective retail investor that is either switching between stocks quickly or buying underlying stocks while also buying protective puts," she added.

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