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Direxion Launches Two New ETFs Tied to Nvidia Corp.

Direxion, a financial products provider, has announced the launch of two exchange-traded funds (ETFs) linked to the price movement of Nvidia Corp. These new ETFs aim to take advantage of the excitement surrounding artificial intelligence (AI) developments that have contributed to the surge in Nvidia's stock this year.

The first ETF, called the Direxion Daily NVDA Bull 1.5x Shares, seeks to deliver 1.5 times the price return of Nvidia's shares on a daily basis. This ETF appeals to bullish investors who want to capitalize on the upward movement of Nvidia's stock, which has more than tripled in value year-to-date.

On the other hand, the Direxion Daily NVDD Bear 1x Shares ETF caters to bearish investors who want to profit from a decline in Nvidia's shares. By providing a 1x inverse exposure to Nvidia's stock price movements, this ETF allows investors to benefit when the stock price goes down.

Single-stock ETFs, which allow investors to trade a single stock in the form of an ETF, have gained popularity in recent years. However, they also come with increased risk due to their leveraged nature. Leveraged ETFs, such as those offered by Direxion, provide amplified returns, but they also amplify losses if the market moves against the investor's position.

While some market experts question the necessity of buying a 1.5x return ETF solely focused on Nvidia, considering it as pure speculation, Direxion has seen success with similar ETFs in the past. Their Direxion Daily TSLA Bull 1.5x Shares ETF, tied to Tesla's stock, is currently the largest among its counterparts, with $1.1 billion in assets.

It is worth noting that GraniteShares already launched a comparable ETF, the GraniteShares 1.5x Long NVDA ETF (NVDL), back in December 2022.

In conclusion, Direxion's latest ETF offerings targeting Nvidia Corp. appeal to investors who want to take advantage of the growing interest in AI development. However, it is important to acknowledge the increased risks associated with leveraged ETFs, which can lead to significant losses in adverse market conditions.

– Reuters