Maximize Your Returns with Single-Stock ETFs: Focusing on One Company's Growth Potential

Single-stock ETFs are leveraged ETFs whose performance is related to the daily return of an individual stock. For example, if Amazon stock increased by 2%, a 2X Amazon single-stock ETF would increase by 4%.You can go long directly or even go long on a single stock without financing, which can help investors obtain relatively higher investment returns.

As with other leveraged ETFs, single-stock ETF issuers try to meet their target returns by trading complex financial instruments called derivatives.

Options have been the primary vehicle for investors to do just that. Unfortunately, trading them is rife with pitfalls and requires a level of sophistication that many investors, if not most, lack.The ETF issuer offers leveraged and inverse single-stock ETFs that allow investors to profit on either downward movements in the underlying stock or maximize upward movements. They avoid many of the problems and complications associated with trading options directly and, critically, they can be bought and sold right from a brokerage account in the same way you would the underlying stock.

Single-stock ETFs come in a few different varieties:

Leveraged long single-stock ETFs target a multiple of their stock. For example, the AXS 2X NKE Bull Daily ETF (NKEL) aims for two times the daily return of Nike stock. So if Nike rises 2% on a given day, the ETF is supposed to rise 4%.

Short single-stock ETFs target the inverse of their stock. The Direxion Daily TSLA Bear 1X Shares ETF (TSLS), a short single-stock ETF, tracks the opposite of the daily return of Tesla. That means if Tesla stock falls 5% on a given day, the ETF should rise 5%.

Leveraged short single-stock ETFs target a negative multiple of their stock. One example, the AXS 2X PFE Bear Daily ETF (PFES), is designed to give two times the opposite of the daily return of Pfizer. So if Pfizer falls 4% over a day, the ETF should rise 8%.

Hedged single-stock ETFs target a limited version of their stock's daily gains and losses. The Innovator Hedged TSLA Strategy ETF (TSLH), for example, tries to deliver the daily return of Tesla but is capped at a maximum of 9.29% and a minimum of -10%.

There are ETFs related to 7 stocks including M7. Here is a list you can refer to：

Traders could use single-stock ETFs to double down on short-term bets on companies. However, single-stock ETFs are not long-term investments. "The daily rebalancing and effects of compounding may cause returns to diverge quite substantially from the performance of the, in this case, one underlying stock, especially if these products are held over multiple days or more," SEC Commissioner Caroline Crenshaw wrote in a statement on the SEC website in July 2022 They are a day-by-day, ticker-by-ticker strategy. They're not meant to be purchased on Monday if you expect to hold onto them until Friday.