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Further Reading from MarketBeat.com How Much Risk Is Too Much? Here Come 5X Leveraged ETFsWritten by Jordan Chussler. Published 10/24/2025. 
Key Points - Leveraged ETFs are incredibly popular and now account for 33% of all new ETFs.
- Volatility Shares plans to launch 27 highly leveraged ETFs, including the first-ever 5x leveraged ETF in the United States.
- The funds will give traders access to leveraged bets on tech giants, including NVIDIA and Palantir, as well as crypto stocks and gold funds.
Since debuting in U.S. markets in 2006, leveraged exchange-traded funds (ETFs) have given active traders and professional investors a way to amplify short-term strategies. That June, ProShares launched the first 2x long ETFs for exposure to major indices. A month later the firm rolled out four inverse ETFs that provided 2x short exposure, offering an alternative to traders looking to short or buy put options. Solving a Trillion-Dollar Problem with AI – and You Can Own a Piece With backing from Adobe and major investors, RAD Intel is gaining momentum fast. They've secured a potential Nasdaq ticker, and shares are still available at $0.81. Lock in your shares before the price changes Over the past 19 years, their popularity has surged, and the market now includes 3x leveraged funds and single-stock leveraged ETFs. Earlier this month, Volatility Shares Trust filed paperwork with the U.S. Securities and Exchange Commission (SEC) for 27 new highly leveraged ETFs, including what would be the first-ever 5x leveraged ETF in the U.S. market. 5x Leveraged ETFs: High Risk, High Reward Leveraged ETFs are among the most heavily traded funds by daily average volume. That demand has contributed to roughly 900 leveraged products now available on U.S. exchanges. They account for about 33% of all newly launched ETFs, according to Tom Bruni, head of markets and retail investor insights at StockTwits. But because they are designed for very short-term use, leveraged ETFs represent only about 1% of the U.S. ETF industry's roughly $12 trillion in assets under management. Volatility Shares' SEC filings reflect that demand, and the timing coincided with heightened market volatility this month. The CBOE Volatility Index (VIX) climbed more than 55% from Oct. 1 to Oct. 16, then fell by more than 26%, illustrating the kind of price swings that can make or break leveraged positions. Currently, the SEC only allows single-stock ETFs to provide up to 2x exposure. If Volatility Shares' filings are approved, traders could enter positions seeking to quintuple the daily return of selected underlying stocks. According to the filings, those stocks would include tech giants such as NVIDIA (NASDAQ: NVDA), Tesla (NASDAQ: TSLA), and Amazon (NASDAQ: AMZN), in addition to AI-focused Palantir (NASDAQ: PLTR) and fabless chip designer Advanced Micro Devices (NASDAQ: AMD). Volatility Shares also filed for ETFs that would provide leveraged exposure to Coinbase Global (NASDAQ: COIN) and enterprise analytics and mobility software provider MicroStrategy (NASDAQ: MSTR)—which holds a Bitcoin (BTC) treasury valued at more than $33 billion. Additionally, the company filed for a 3x leveraged ETF for the SPDR Gold Shares (NYSEARCA: GLD), which, if approved, would let investors make sizable bets on gold's performance. Concerns About Amplifying Sell-Offs Persist Despite Volatility Shares filing for the 27 potential ETFs between Oct. 14 and Oct. 21, the SEC is not currently processing new filings because of the ongoing federal government shutdown. If approved, the company proposed that the ETFs would become effective 75 days after submission. Critics note that leveraged products can compound losses during market pullbacks or corrections, potentially magnifying sell-offs. The arrival of 5x leveraged ETFs could worsen those effects. Last week, Reuters cited a JPMorgan report estimating that roughly $26 billion of leveraged ETF selling on Friday, Oct. 10, intensified the market's decline amid President Trump's renewed trade-war talk with China. While the SEC may be inactive during the shutdown, that does not guarantee these ETFs won't be approved once the government resumes business. Bryan Amour, Morningstar's director of ETF and passive strategies research for North America, told Business Insider that approval of these leveraged ETFs is probable given the commission's recent track record. "I think they stand a chance," he said, adding that "this is testing the limits of the SEC's more accommodative policy under the new administration." Leveraged ETF Buyer Beware Popularity alone does not make leveraged ETFs appropriate for everyday investors. During the pandemic, retail interest in crypto and day trading surged, and many inexperienced investors who chased gains in altcoins and meme stocks suffered severe losses when those assets reversed. Now imagine those losses compounded by 5x leverage. If you're considering highly leveraged ETFs, it's critical to understand they are designed for extremely short-term trades. That's because of volatility decay. Leveraged ETFs rebalance daily to maintain their target leverage ratios—resetting exposure to their underlying indices or, in Volatility Shares' case, underlying individual stocks. Consequently, their returns reflect daily performance and can diverge significantly from the long-term returns of the underlying index or stock. The SEC will have the final say, and that won't happen until government services resume. If the agency does approve Volatility Shares' first-ever 5x leveraged ETF, carefully reassess your risk tolerance before jumping in.
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