More retail investor => Higher IV environment?

[Koreandirectionaltrader]

Is there any evidence / research papers regarding the relationship between the number of retail investors (or higher volume contribution of mom and pop traders) and implied volatility in the market?

I thought more retail option traders flowing into the market generally lead to higher iv because most of them adopt naked buy only strategy.

Anecdotally this has proven this year such as in GME case...

 

[SPX Options Trader]

I thought more retail option traders flowing into the market generally lead to higher iv

I believe that's the general idea, but don't quote me on it... I'm not too keen on the technicalities and science of the trading world.
The more options buys, movement, there is...the more the IV, implied volatility, and VIX...will move and skew implying something may, potentially, loosely expected to, happen.

But more often than not, the masses are generally wrong and have misjudged things. So don't look too deeply into it.

 

[ZBZB]

Is there any evidence / research papers regarding the relationship between the number of retail investors (or higher volume contribution of mom and pop traders) and implied volatility in the market?

I thought more retail option traders flowing into the market generally lead to higher iv because most of them adopt naked buy only strategy.

Anecdotally this has proven this year such as in GME case...

Thomas Peterffy has said that most IB customers do covered calls and the market makers who are short calls sell them to hedge funds. Recently he has said that IB customers are selling more calls than they have stock.