1 Day, 50% Gains: Leveraged ETFs Deliver Eye-Popping Returns
- A staggering 27 ETFs climbed more than 40% on Wednesday.
- The S&P 500 soared 9.5% for its best day since 2008.
- Leveraged funds are thrilling for short-term traders.
Wednesday was one for the record books. The S&P 500 soared 9.5% for its best day since 2008, while the Nasdaq-100 posted its second-best day ever. But even those jaw-dropping gains paled in comparison to what happened in the leveraged ETF world.
A staggering 27 ETFs climbed more than 40% on the day, while 63 jumped at least 30%, according to etf.com data. These eye-popping returns were driven by leveraged ETFs tied to individual stocks or indexes, which amplify daily moves using financial derivatives.
SOXL: Wednesday's Big Winner
The biggest winner was the Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL), which surged nearly 55%. SOXL, a triple-leveraged ETF tracking semiconductor stocks, is a trader favorite amid the ongoing AI boom. But it’s been a bumpy ride. The ETF was up as much as 144% at one point in 2024 before ending the year down 2.6%.
So far in 2025, SOXL has lost more than half its value—even after Wednesday's massive pop.
SOXL was the only index-based product in Wednesday’s top-10 performers. The rest were all single-stock leveraged ETFs, which rode the wild price swings of high-beta names:
- The T-Rex 2X Long ARM Daily Target ETF (ARMU) jumped 50% as ARM Holdings plc (ARM) surged.
- The GraniteShares 2x Long RDDT Daily ETF (RDTL) gained 49% on the Reddit Inc. (RDDT) rebound.
- The Defiance Daily Target 2x Long MSTR ETF (MSTX) rallied 48.8%, tracking Strategy Inc. (MSTR).
- The Leverage Shares 2X Long HOOD Daily ETF (HOOG) added 48.5%, mirroring Robinhood Markets Inc.'s (HOOD) jump.
Short-Term Thrill
These leveraged funds can be thrilling for short-term traders. But the same volatility that makes them attractive in moments like this also makes them punishing to hold long term. Daily rebalancing introduces what's known as "decay"—a drag on performance in volatile or choppy markets.
In fact, the worst environment for holding leveraged ETFs long term is one like this: highly volatile, with sharp reversals and unpredictable swings.
For traders with impeccable timing, leveraged ETFs can be golden. But for most investors, Wednesday’s fireworks are a reminder that these products are built for speed, not endurance.
