JPMorgan analysts are sounding a note of caution for technology equities after observing that retail investor leverage in options and margin accounts has fallen back from extreme levels. The bank's review of leverage patterns across investor types suggests that this retracement could weigh on tech stocks in coming months.
Analyst Nikolaos Panigirtzoglou pointed to exchange-traded call buying among customers holding fewer than 10 contracts as a proxy for retail options activity. That measure peaked on June 5 at close to 14 million contracts, a level that matched earlier highs recorded in October 2025 and November 2021. "Following these previous peaks, tech stocks saw a multi-month correction," Panigirtzoglou wrote, adding that capitulation in those prior episodes coincided with readings between 2 million and 4 million contracts.
JPMorgan also called attention to U.S. individual investor margin account leverage, which it described as "at extreme levels by historical standards." The bank noted that the peak reached this year aligns with leverage seen at the end of 2021 and in mid-2018. Both of those earlier periods, the note says, were followed by multi-month corrections in equity markets.
Among other investor groups, risk parity funds showed clearer signs of deleveraging. JPMorgan's implied leverage proxy for risk parity retreated in recent weeks after hitting its highest level in more than a decade in mid-May. By contrast, evidence that hedge fund and bank leverage had peaked was characterized as "more tentative," indicating less conclusive movement in those sectors' use of leverage.
On the macro-balance-sheet front, the bank offered a degree of reassurance. It highlighted that both corporate and household leverage have been falling since the pandemic, and concluded that those declines "thus pose little vulnerability to macro shocks."
JPMorgan additionally flagged leveraged exchange-traded funds as an important amplification force for technology stocks in recent months. The bank reported that leveraged ETFs have $247 billion in assets under management globally and carry a predominantly technology focus, which can intensify price moves in that sector.
Market data in the note included a snapshot of the S&P 500 that showed a modest intraday decline, with the index at 7,358.22, down 7.24 points, or 0.10% at the referenced close. The bank's broader caution stems from the combination of elevated retail options buying, very high margin leverage among individual accounts, and sizable leveraged-ETF exposure concentrated in technology names.
Taken together, the bank's analysis suggests that recent extremes in leverage may have reversed course, and that the unwinding of that leverage could act as a headwind for technology shares. The speed and extent of any market reaction will depend on how leverage across different investor groups continues to evolve, with particular attention likely on retail margin usage, retail options activity, risk parity positioning, and leveraged ETF flows.