Leveraged ETF Glossary

Plain-language definitions of the terms you'll see across this site and in the SPCU prospectus.

2X Daily Leverage

Investment exposure designed to deliver 200% of the daily percentage change of an underlying security, before fees and expenses. Resets each trading day.

Daily Reset

A geared ETF rebalances its leverage exposure at the end of each trading day so the target multiple applies to the next single day's return.

Compounding (Geared ETF)

Because daily returns compound, a leveraged ETF's multi-day return is the product of its daily returns - not simply 2X the underlying's cumulative return.

Volatility Drag

In volatile, sideways markets, daily compounding of a leveraged product erodes value even when the underlying ends roughly flat.

Path Dependency

The return of a daily-reset leveraged ETF depends on the specific sequence of daily returns, not only the start-to-end move of the underlying.

Swap Agreement

A derivative contract between two parties to exchange cash flows tied to a reference asset's return. Leveraged ETFs commonly use swaps to obtain geared exposure.

Counterparty Risk

The risk that a derivative counterparty fails to meet its obligations - relevant for swap-based ETFs.

NAV (Net Asset Value)

The per-share value of an ETF's assets minus liabilities, calculated at the end of each trading day.

Market Price

The price at which an ETF actually trades on an exchange during the day; may differ from NAV.

Underlying (SPCX)

For SPCU, the underlying security is SpaceX common stock, trading on Nasdaq under the ticker SPCX.

Expense Ratio

The annual fee, expressed as a percentage of assets, charged by the fund to cover operating expenses.

Single-Issuer ETF

An ETF whose performance is tied to one company's stock rather than a basket - concentrating both upside and risk.