My Losing Leveraged ETFs
My ETF holdings are mainly the leveraged ETFs which have higher risk profile compared to other type of ETFs. However, my problem with my ETF holding is their lackluster performance. ![]()
Luckily though they are only a small position of my overall portfolio and I am not looking at profit near term.
That being said, if you google about leveraged ETFs, you will see the red flag as below immediately.
Leveraged ETFs decay due to the compounding effect of daily returns, volatility of the market and the cost of leverage.The volatility drag of leveraged ETFs means that losses in the ETF can be magnified over time and they are not suitable for long-term investments.
One way I try to offset the compounding effect and the cost is to sell some covered calls. I do that sometimes but not very often.
So why I buy Leveraged ETFs?
The reason is simple, I wanted to experiment with a small holding that promises 2x return from the underlying stock. I do that on the stocks that I believe in their ability to outperform the market for the long term. You can say that these are all bets and there may not be happy ending - well noted about this.
Which Leveraged ETFs I hold?
Let's take a look at each of them ![]()
$GraniteShares 2x Long NVDA Daily ETF (NVDL.US)$ - Down about 14%. I didn't DCA (which I should) during the recent dip because I am almost full invested at this point of time. $NVIDIA (NVDA.US)$
$Direxion Daily GOOGL Bull 2X Shares (GGLL.US)$ - Down almost 15% due to the sentiment around Antitrust lawsuit against $Alphabet-A (GOOGL.US)$.
$GraniteShares 2x Long META Daily ETF (FBL.US)$ - Up a tiny 1.7%. Better than in red. $Meta Platforms (META.US)$
How I feel about Leveraged ETFs?
Most will advise not to hold any leveraged ETFs for long term. It rises very fast during bull run, and goes down equally fast during the sell off. It turns your facial expression from ![]()
to ![]()
and vice versa just as quick. If you cannot ignore the big swing on the short term basis, it is not advisable to hold any of them.
Do you invest in Leveraged ETFs? Why? Comment below. To the moon 🚀
Here I post some of my P/L for the month of Sept.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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105251507 : leverage etf only good when more green then red..look at myself..bought nvdl at 58.4 at 119.5 price..now even at 120.7 still not reach the average price
TerribleInvestor : New investor here, how would this compare to options? Which would u prefer out of the two for riskier instruments in the stock market?
Right now I’m just buying and holding long term, looking for shorter term and riskier plays.
105251507 TerribleInvestor : better this than option...option got expired date..this one dont have
Wall Street Raider TerribleInvestor : options are incredibly risky. few secs yr lost could balloon like crazy. not recommended for new investors.
WolfRun OP TerribleInvestor : Unless you can predict the market and stock direction, to me, option is a gamble on up or down. That's why I only stay with a safer way to play option with covered calls and cash secured puts. I got confused with all the option strategies anyway.
Aaron Invests (AI) : I find leveraged ETF is more of a day trade thing and not a long term to mid term keep. It is best to trade during voilatile times.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Aaron Invests (AI) Wall Street Raider : Personally I think options is less risky if you are holding shares. Is a very useful too to hedge. Unless you are going naked options then you are going full speculation or gambling.
WolfRun OP Aaron Invests (AI) : Agreed. Same view. I am trying something new here.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Aaron Invests (AI) WolfRun OP : Getting prepared myself for options play at $MARA Holdings (MARA.US)$ watching out for the surge in $Bitcoin (BTC.CC)$
WolfRun OP Aaron Invests (AI) : I did bought $MARA Holdings (MARA.US)$ for short term play for a small little profit. Highly speculative stock.
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