3x leveraged fund goes to zero; investors lose everything

A 3x leveraged product tied to AMD just went to zero. And investors who bet against the chipmaker have been completely wiped out.

The fund, which is designed to deliver triple the inverse of AMD’s daily return, imploded after the stock surged following the announcement of its deal with OpenAI.

It’s a textbook example of the risks that investors often unknowingly take when betting on leveraged and inverse ETFs. They can magnify downside risk, decay in value over time and ultimately self-destruct if the markets move in the wrong direction.

Many traders don’t fully understand how leveraged products work or how quickly they can go to zero. In the wrong situation, investors losing 100% of their investment isn’t out of the question.

Even as tech stocks rally in 2025, the collapse of this 3x fund offers a brutal and uncomfortable lesson that leverage can cut both ways.

AMD recently signed a deal with OpenAI.

Shareholders in the GraniteShares 3x Short AMD Daily ETP, which trades in Europe, learned that lesson the hard way.

Earlier in October, AMD announced that it had signed a deal with OpenAI to deliver 6 gigawatts of its GPUs over the next several years. The deal could result in tens of billions of dollars in revenue for AMD.

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At one point, AMD stock surged more than 37%. That’s great for AMD shareholders, but not the traders that were levered short the stock through the GraniteShares fund.

The math shows how the worst case scenario comes to be. A 33⅓% gain in the underlying stock would get multiplied to a 100% loss in a 3x short product. Once the AMD stock rally cleared that barrier, it triggered what’s called an “index cancellation redemption event.” In short, this means that the fund is liquidated and shareholders are left with nothing!

The question becomes how did all of this happen in the first place? More importantly, can it happen again?

It’s important to start by pointing out that leveraged and inverse ETFs don’t invest in the underlying stocks themselves. They invest in derivatives contracts designed to deliver some level of exposure tied to the stock.

In the case of the GraniteShares 3x Short AMD ETP, they do this with the goal of generating -300% of the return of AMD during a single day. At the end of the trading day, that leveraged exposure is reset and the process begins again the next day.

More ETFs

Leveraged ETFs aren’t built to be long-term investments because of the daily reset, the volatility drag and the leverage decay. Leverage ETF risk goes beyond just what investors can lose in a single day. There are structural considerations that can be difficult for the average investor to understand.

Leveraged products going to zero happens more than you think. The most famous example comes from 2018 during “Volmaggedon.” As a result of the VIX spiking unexpectedly, the VelocityShares Daily Inverse VIX Short Term ETN ended up going bust and destroying $2 billion of investor money in the process.

• The Europe-listed GraniteShares 3x Short AMD Daily ETP went to zero and investors lost everything.

• It happened as a result of the AMD-OpenAI deal, which sent AMD stock up 37%.

• Leveraged ETFs can be incredibly risky for investors who don’t understand the risks.

• A short VIX product went bust in 2018, resulting in the loss of $2 billion.

Here are a few simple ideas to protect yourself from losing everything on a leveraged ETF

• Protect your portfolio: Build the core of your portfolio around high quality stocks and bonds. Limit exposure to leveraged ETFs to only what you’re comfortable losing.

• Understand what you’re investing in: Leveraged ETFs are complex and difficult to understand. If you can’t easily explain how it works, it’s best to stay away from it.

• Look for safer ETF alternatives: Sector ETFs, including those investing in semiconductor or software stocks, can give you tech exposure without the extra risk

• Avoid leverage losses: Using limits or stop losses may be able to help before the worst happens.

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This story was originally reported by TheStreet on Oct 15, 2025, where it first appeared in the Investing News & Strategies section. Add TheStreet as a Preferred Source by clicking here.