SPXL sells a simple promise: three times the daily move of the S&P 500. What its factsheet does not sell is the quiet gap that opens between that promise and reality every time markets zigzag.
A Redditor posted a screenshot to r/wallstreetbets last week with the title “Boring $4,000,000 gain with triple-leveraged SPXL.
Direxion Daily S&P 500 Bull 3X ETF offers amplified exposure to the S&P 500, delivering 3x daily returns but with heightened volatility and risk. SPXL has significantly outperformed SPY over the past decade, but its structure exposes investors to volatility decay and amplified losses during downturns. The fund's heavy technology weighting and daily leverage reset can accelerate gains in bull markets but can also exacerbate losses in bear markets.
TQQQ and SPXL both use daily 3x leverage but track different indexes, leading to different sector exposures and performance patterns. TQQQ posted a higher one-year return but experienced a deeper five-year drawdown compared to SPXL.
SPXL carries higher risk and potential return, with a 3x leverage factor compared to SSO's 2x. SPXL's expense ratio is slightly lower, and it also offers a marginally higher dividend yield.
SPXL offers 3x daily leveraged exposure to the S&P 500, best suited for short-term tactical trades around major market catalysts. Key bullish drivers include surging AI investment, positive trade deals, and potential Fed rate cuts, all of which could spark sharp market moves. Leveraged ETFs like SPXL amplify both gains and losses, with volatility and loss recoupment risks making them unsuitable for long-term holding.
Some skeptics may point to the SPXL ETF as risk-prone because it is triple-leveraged.
The dog days of summer don't apply to traders. Seeking profits is an all-season affair.
SPXL, a leveraged ETF, aims for 3x SPY's daily return, with a 0.87% expense ratio offset by a 0.91% dividend. My strategy involves holding SPXL when SPY is above its 200-day moving average, selling when it falls below. Despite recent underperformance, the strategy minimizes drawdowns; SPXL is now a buy signal, indicating lower volatility and higher returns.
Buying SPXL when SPY is above its 200-day moving average produces positive risk-adjusted returns. The strategy beats the market over the long term. For this strategy to work, an investor has to pick an index that has a solid return/risk ratio.
With a new U.S. president at the helm and a Fed that's getting mixed signals from the economy, uncertainty abounds. Traders can ease those fears with leveraged and inverse exchange-traded funds (ETFs) from Direxion's product suite.
The S&P 500 continues to march higher, reaching over 27% year to date. Bullish bets for 2025 are already coming for the index, with the most ambitious target being a price target of 7,100 from ETF provider Oppenheimer.