T-REX 2X Long MSTR Daily Target ETF (MSTU)
MSTU Is Quietly Bleeding Value Faster Than Its Underlying Stock, and the Mechanism Compounds Every Single Day
A year ago, T-Rex 2x Long MSTR Daily Target ETF (CBOE:MSTU) traded at $74.90.
MSTU Down 95% in a Year, How a 2x Daily Fund Lost Nearly Everything While Its Underlying Fell 67%
A $10,000 stake in the T-REX 2X Long MSTR Daily Target ETF (NASDAQ:MSTU) bought at Thursday's close was worth about $8,633 at Friday's bell, a roughly 14% single-session drawdown from $3.95 to $3.41.
Is the Explosion of Single-Stock ETFs an Opportunity or a Danger?
The Magnificent 7 account for roughly a third of the entire S&P 500, so it's understandable that some investors might consider focusing an outsized portion of their portfolio on either one of these stocks or a similarly-sized titan of the market. At the same time, single-stock exchange-traded funds (ETFs)—funds that take the common diversification tactic of ETFs and flip it in order to provide leveraged exposure to a single name—have proliferated quickly.
Leverage Decay Forced MSTU's 91% Plunge
If you own MSTU, you're making a specific bet: that MicroStrategy's Bitcoin holdings will move sharply higher in the near term, and that daily compounding will work in your favor.
MSTU Adds An Extra Layer Of Risk On Top Of A Leveraged Bitcoin Strategy
MSTU offers 2x daily the daily performance of MSTR via options, introducing an additional layer of risk on top of a leveraged bitcoin strategy. The ETF's performance is highly sensitive to volatility and bitcoin price swings, amplifying both upside and downside moves. Holding MSTU beyond a single day can lead to substantial gains or losses due to compounding effects and value decay, especially in flat or choppy markets.
MSTU: A Great Fund If You Like Bitcoin To Go Higher
MSTU is a 2X leveraged ETF on MSTR, which itself is a leveraged play on Bitcoin, offering high potential returns and risks. MSTU's extreme volatility, with an implied volatility of 180% and an ATR of 19%, makes it suitable only for short-term trading. MSTU has outperformed during Bitcoin bull runs but underperformed during bearish phases, emphasizing the importance of timing in leveraged funds.