Bullish Nvidia Trade Soars as Day Traders Bet on Leveraged ETFs

Bullish Nvidia Trade Soars as Day Traders Bet on Leveraged ETFs

(Bloomberg) – Nvidia Corp.’s latest binge is fueling an unprecedented rally in the booming leveraged ETF sector, as retail traders go all-in on “the world’s most important stock.”

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A GraniteShares fund, which offers investors twice the daily return of the company led by Jensen Huang, is now up 450% over the past year, with a record trading volume of $4.7 billion per year. last week. The $2.8 billion GraniteShares 2x Long NVDA Daily ETF (ticker NVDL) launched in December 2022.

Nvidia, the poster child of the artificial intelligence craze, is fueling the multi-record bull market with the now $2.8 trillion chipmaker releasing a blockbuster new earnings report as bullish call options explode. On the other hand, bears have been crushed by the GraniteShares 2x Short NVDA Daily ETF (NVD), which tracks the daily inverse return of the underlying stock, down 86% this year alone.

Read more: Nvidia stock rally fueled by short-term call option squeeze

As speculative euphoria runs amok in the markets, the creator behind Stepped Up Products is preparing an avalanche of new options-fueled strategies tracking everything from gold and Big Tech to Bitcoin.

In other words, Nvidia is increasingly the new Tesla Inc. as tech-savvy retail traders embrace new ETF strategies.

“If we were having this conversation three years ago, I would say we would be talking exclusively about Tesla. That’s where the enthusiasm was. That’s where all the feeds were,” GraniteShares CEO Will Rhind said on Bloomberg Television’s ETF IQ. “Now obviously the whole conversation is dominated by Nvidia, which is why I think Nvidia is the most important stock in the world right now. And it goes without saying that we have an ecosystem around Nvidia.

Leveraged funds have gained popularity this year, accumulating $11 billion in inflows so far, on track to keep pace with last year’s $20 billion, according to data compiled by Bloomberg Intelligence. Demand for this category of funds has increased as investors look for new vehicles to bet on major market themes. But they have also drawn mixed reviews, in part because they expose retail traders – who are often characterized as less sophisticated than institutional ones – to high risks.

GraniteShares has filed for at least 25 ETFs that track the performance of other single-stock ETFs with 2x and 3x leveraged daily strategies.

“What we are providing to the masses is institutionally valued leverage – that is the big step forward,” he added. “Leverage carries risks and these products are not risk-free.”

–With the help of Denitsa Tsekova.

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