How Super Micro Traders Made a Killing on This Bold ETF Bet
A fivefold surge in two weeks? That’s exactly what happened with SMCX, a high-flying leveraged ETF that tracks SMCI.
From a low of $28 on Feb. 3, the Defiance Daily Target 2X Long SMCI ETF (SMCX), which tracks Super Micro Computer Inc. (SMCI), skyrocketed nearly fivefold to $126 in just two weeks. These are the kind of massive gains leveraged single-stock ETF investors dream about.
Investors who timed it right—whether by luck or skill—made out like bandits. In fact, flows data show many cashed out at the highs, using SMCX exactly as intended: a short-term trading vehicle. Between Feb. 13 and Feb. 21, as SMCX soared, investors pulled money out of the ETF every day, with total outflows hitting $82 million.
The pattern was the opposite when SMCX languished near its lows. Between Oct. 31 and Feb. 3, investors poured about $200 million into the ETF, positioning themselves for the next move.
Source: Bloomberg
Of course, not everyone walked away a winner. But in this case, traders collectively played their cards right.
Volatility Magnet
As a leveraged ETF tracking Super Micro, SMCX is a prime tool for volatility-hungry traders. And Super Micro has been on a wild ride of its own.
After surging through 2023 and early 2024 on booming demand for its AI servers, the stock crumbled amid concerns over fraud, accounting irregularities, and a potential Nasdaq delisting. From around $10 in April 2023, it hit a high of over $100 by March 2024—only to lose 80% of its value over the next eight months.
The biggest hit came in October when Super Micro’s auditing firm abruptly resigned, citing concerns over the company’s financials. The stock's price was cut in half in days. Then, the company delayed its annual filing with the Securities and Exchange COmmission, fueling delisting fears.
But in early February, Super Micro reassured investors, pledging to file by the new Feb. 25 deadline. That sent shares soaring to $60 from $27 by Feb. 19 before profit-taking pulled them back to $45 on Feb. 25.
Then late Tuesday, the company delivered on its promise—and the stock rocketed back toward recent highs. Shares of Super Micro and SMCX jumped as much as 23% and 46%, respectively, on Wednesday.
And wouldn’t you know it? Some investors had spotted the opportunity. After two weeks of outflows, SMCX finally saw fresh inflows: $3 million flowed in the day before the surge.
Investors keep timing this one just right.
