SOXL is a tactical, high-risk play on semiconductor momentum, not a core holding, but current sector flows and AI demand support a bullish setup. Options and gamma positioning cluster around $25, with buy signals stacking up, suggesting mechanical and sentiment-driven upside potential in the near term. A bull call spread targeting July expiry ($27/$32) offers a defined-risk way to capitalize on further upside, aligning with technical and options market dynamics.
On Wednesday, Direxion expanded its lineup of Leveraged & Inverse ETFs with the release of four new funds. Two of the new funds focus on the daily stock performance of Cisco (CSCO).
We have highlighted five ETFs that have seen higher average volumes over the past three months.
Leveraged ETFs surge this month with investors betting on amplified gains amid hopes of a rebound after tariff-driven sell-off.
Since Liberation Day, the market has made many moves in both directions. While many investors have focused on hedging volatility, a handful of investors have used this is as opportunity to take advantage of any directional movement — whether up or down — by using leveraged ETFs.
The semi industry is caught in the midst of the trade war, putting companies like Taiwan Semiconductor on notice. Initial news, however, is positive, with Taiwan looking to work with the U.S. on tariff negotiations.
Since Liberation Day, the market has made many moves in both directions. While many investors have focused on hedging volatility, a handful of investors have used this is as opportunity to take advantage of any directional movement — whether up or down — by using leveraged ETFs.
The Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL) has suffered a big reversal in the past few months as signs emerged that the artificial intelligence (AI) bubble was starting to fade. The SOXL ETF, which provides a leveraged exposure to the biggest semiconductor companies, retreated to $26.30, down by 62% from its 2024 high.
I believe Direxion Daily Semiconductor Bull 3X is a strong sell due to increasing competition and margin compression in the AI GPU market. Custom GPUs from companies like Google and Amazon are reducing demand for Nvidia GPUs, further compressing margins and impacting SOXL negatively. SOXL's poor tracking of the benchmark index and significant tracking errors over 1, 3, and 5-year periods highlight its inefficiency.
SOXL is a highly volatile leveraged ETF, suitable for short-term trading or aggressive investors with a longer time horizon. The recent market panic over DeepSeek's AI LLM has caused a significant drop in semiconductor stocks, presenting a buying opportunity. Despite the current downturn, semiconductors remain essential for economic growth, and the sector is likely to recover quickly.
Leveraged ETFs are risky and unpredictable, and daily trading internals over the past 6 months have caused SOXL to return worse than it's target 3x factor to the underlying. Despite SOXL's impressive past gains, its recent 60% drop indicates impaired value that isn't likely to be recovered even if semiconductor stocks rebound. Alternatives to SOXL that I presented in mid-June have outperformed this leveraged ETF.
Leveraged ETFs like SOXL offer high volatility, making them suitable for DIY option monetization to generate income and capitalize on AI trends. SOXL's 30-Day IV of 70-80 and active options market provide opportunities for significant weekly and monthly yields through strategic call selling. DIY option income strategies, including selling PUTs and using protective PUTs, can enhance safety and establish capital buffers.