Leveraged Nvidia ETF Volume Record
GraniteShares' Success with Leveraged ETFs
The GraniteShares fund, which offers investors two times the daily return of Nvidia, run by CEO Jensen Huang, has seen remarkable growth. Over the past year, the fund is up 450%, with a record trading volume of $4.7 billion last week. The $2.8 billion GraniteShares 2x Long NVDA Daily ETF (ticker NVDL), launched in December 2022, has significantly benefited from Nvidia’s success.
Nvidia's Role in the AI Boom
Nvidia, a leading player in the artificial intelligence sector, continues to fuel the bull market with record-breaking performance. The company, now valued at $2.8 trillion, recently posted a blockbuster earnings report, driving up bullish call options. Conversely, the GraniteShares 2x Short NVDA Daily ETF (NVD), which tracks the daily inverse return of Nvidia stock, has plummeted 86% this year, highlighting the risks for bearish investors.
Expanding Leveraged ETF Strategies
As speculative fervor surges in the market, GraniteShares is preparing to launch a variety of new options-fueled strategies. These will include ETFs tracking assets such as gold, Big Tech, and Bitcoin. According to Will Rhind, CEO of GraniteShares, Nvidia has become as significant to tech-bullish retail traders as Tesla Inc. was a few years ago. He emphasized the growing ecosystem around Nvidia during an interview on Bloomberg Television’s ETF IQ.
Leveraged funds have seen a surge in popularity this year, with $11 billion in inflows to date, on track to match last year’s $20 billion, according to Bloomberg Intelligence. This growing demand reflects investors' interest in new vehicles to capitalize on major market themes. However, these funds have also faced criticism for exposing retail traders, often considered less sophisticated than institutional investors, to high risks.
The Risks and Rewards of Leveraged ETFs
GraniteShares has filed for at least 25 ETFs that track the performance of other single-stock ETFs with daily 2x and 3x leveraged strategies. Rhind pointed out that these products offer institutionally priced leverage to a broader audience, marking a significant innovation. However, he cautioned that leveraged products come with substantial risks, and investors must be aware of the potential for significant losses.
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