Here are the advantages of why leveraged ETFs are worth watching:
- Spot trading, no margin required
Users can buy leveraged ETFs on ZT just like buying ordinary spot, so that users are free from issues such as margin and forced liquidation risks. Taking 3x long BTC (BULL) as an example, the user only needs to look at the price and net value - enter the purchase quantity - choose to buy BULL, no other operations are required.
- Compound interest effect and risk control
The leveraged ETF will automatically transfer the position income to the principal, that is, if the leveraged ETF purchased by the user generates a floating profit (the floating profit before rebalancing), then the floating surplus will increase the position of the leveraged ETF when it is rebalanced next time, i.e. the position of 3 times of the floating surplus will be added, making the gain form a compound interest pattern.
At the same time, leveraged ETFs have their own risk control mechanism (see the rebalancing mechanism section for details). For example, if a user is 3 times long on a BTC contract, and then BTC falls by 33%, there is no doubt that the user's position will be liquidated, leaving nothing. However, if the user buys BTC 3 times long (BULL), the leveraged ETF will fall according to the market conditions, and adjust the position through the rebalancing mechanism to avoid the user's position being liquidated. Even if the BTC price drops by 33%, the user's position still has assets remaining.
Statement:
Leveraged ETFs are emerging financial derivatives. The above content does not constitute investment advice. Please pay attention to risk control.
Leveraged ETF greatly reduces the risk of liquidation and liquidation, but in extreme market conditions, there is a risk of approaching zero and liquidation. Please pay attention to the difference between net value and price to avoid losses.