Options selling with Christian
Growth Investor, Options Selling, Creator of Stock Catalysts
3x leveraged ETFs like the ProShares UltraPro QQQ and Direxion Semiconductor Bull 3x are not foolproof long-term holdings and would suffer badly in a dot-com or GFC-style decline. They target 3x daily returns, and the daily leverage reset compounds losses in volatile periods. The Nasdaq one launched in 2010 at the start of a ZIRP bull market; backtested to the late 1990s it would still be underwater. A 2x software ETF holding Adobe, Microsoft and Salesforce was discontinued this April. x.comÂ
FNGU, a 3x leveraged long on the Magnificent Seven, loses heavily to tracking decay, making it a poor asset to hold long term. Since June 30 last year the Nasdaq has risen 17.9% while FNGU has barely moved, so a private fund that loaded up on it last year has little to show for it. x.comÂ
The Nasdaq 100 looks set for a persistent uptrend after hitting a new record, which favors 3x leveraged exposure through TQQQ. After three choppy months, funds are refocusing on what matters while positioning and sentiment remain lopsided and weak, making a rise likelier than more chop and possibly another major bull run. Leveraged ETFs compound in steady uptrends but lose to friction in chop, as TQQQ's 136% gain against QQQ's 35% in April-May showed. Gulf tensions still need to end. x.com x.comÂ
The Nasdaq 100's options structure remains bullish, with QQQ in positive gamma and gamma extending up toward 760. The 740-750 zone, traded repeatedly for months, is where positions are being digested, so a breakout may take time; as long as 740 holds, this is high-level consolidation. Volatility sellers dominate, keeping the VIX pinned near 15, and if spikes toward 16-20 keep getting sold, the backdrop for risk assets is unchanged; the VIX could reach 13 in October. x.comÂ
The Nasdaq 100 looks ready for a gap down, leaving trimming with trailing stops or sitting on the sidelines as the only way to survive. x.comÂ
TQQQ beats holding ten separate tech stocks, offering the same Nasdaq-100 exposure with 3x leverage in a single position, while QQQ already beats most hand-picked tech portfolios. x.comÂ
The Nasdaq-100 is still early in the AI cycle, and corrections are part of every major growth cycle, not the end of it. Since the dot-com bottom, QQQ is up over 2,000% despite surviving an 83% dot-com collapse, a 55% drop in the financial crisis, and 33% declines in the COVID crash and the 2022 bear market. More than 80% of calendar years still finished positive. x.comÂ
Direxion's 3x semiconductor bear ETF is built to bleed holders through volatility decay, needing 10 reverse splits since 2010 just to keep its price in a tradable range. x.comÂ
Leveraged semiconductor and Nasdaq 100 ETFs should beat a 3x position in the average individual name because market correlations are falling and dispersion is rising. Low correlation among basket members reduces the volatility drag that hurts levered ETFs, as seen when CPU stocks pumped while memory dumped. x.comÂ
Daily 2x leveraged single-stock ETFs such as the SanDisk 2x fund are poor long-term holdings because volatility decay erodes returns. Over six months SanDisk rose 134% and the 2x fund 155%, double the risk for 1.15x the return; at the peak the fund was up over 800% against about 270% for the stock, then gave nearly all of it back. These funds deliver twice the daily return, not twice the return over time, and losses compound whenever the stock chops. Margin or a larger position is better. x.comÂ