Rising Interest in Bearish Leveraged ETFs as Nvidia Volatility Spikes

Interest in leveraged exchange-traded funds (ETFs) that profit from declines in Nvidia's stock has surged ahead of the chipmaker's quarterly results. This trend reflects growing investor anxiety about Nvidia's ability to meet high earnings expectations. Leveraged bearish ETFs have significantly outpaced bullish ones in terms of growth in shares outstanding.

Investor interest in leveraged exchange-traded funds (ETFs) that profit from declines in Nvidia's stock surged ahead of the company's quarterly results, data shows.

Nvidia, which recently overtook Microsoft as the world's most valuable company, has seen its shares play a significant role in major stock indexes. Investor anxiety about the chipmaker's ability to meet growing earnings expectations has driven substantial growth in leveraged bearish ETFs compared to their bullish counterparts.

These bearish instruments are designed to offer daily returns twice the magnitude of any loss in Nvidia's stock. In contrast, bullish ETFs aim to double any daily gains. GraniteShares CEO Will Rhind noted the shifting market sentiment reflected in these trends. Nvidia's stock recently fell after its earnings forecast disappointed investors, leading to a 446% surge in outstanding shares of GraniteShares' bearish ETF from May 21 to the date of the latest earnings release, versus an 85% increase in its bullish ETF.

(With inputs from agencies.)