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.
Related: Best bitcoin ETFs 2025: Fidelity and Grayscale Challenge IBIT
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
