A 3x leveraged product tied to AMD collapsed to zero, wiping out investors who bet against the chipmaker after its stock surged following a deal with OpenAI. This serves as a cautionary tale of the risks associated with leveraged and inverse ETFs, magnifying downside risk and potentially leading to total loss.

The GraniteShares 3x Short AMD Daily ETP in Europe went bust due to the AMD-OpenAI deal, causing a 37% surge in AMD stock. Leveraged ETFs, like this one, can be incredibly risky for those unaware of how they work, as they don’t invest in the underlying stock directly but rather use derivatives to amplify returns.

Investors can protect themselves from leveraged ETF losses by focusing on high-quality stocks and bonds, understanding the complexity of these products, and exploring safer ETF alternatives. Using limits or stop losses can also help mitigate risk before potential self-destruction, as seen with the GraniteShares fund and the VIX short product in 2018.

Read more at Yahoo Finance: 3x leveraged fund goes to zero; investors lose everything