(P1) Tradr ETFs will launch a first-to-market leveraged fund for Xanadu Quantum Technologies (Nasdaq: XNDU) on May 7, providing traders with a new tool to make amplified bets on the recently listed quantum computing company.
(P2) The Tradr 2X Long XNDU Daily ETF, which will trade under the ticker XNDX, "seeks to deliver two times long (200%) the daily performance of Xanadu Quantum Technologies," the company said in a press release on Wednesday.
(P3) The new exchange-traded fund is set to debut on the Cboe exchange. It joins a growing field of single-stock leveraged ETFs from issuers like Defiance ETFs that are designed for short-term, tactical trading rather than long-term investment.
(P4) The launch is significant as it introduces a highly speculative instrument for a company in the nascent quantum computing sector. The availability of 2x daily leverage could attract significant speculative interest, potentially increasing trading volume and volatility in the underlying XNDU stock.
Xanadu Quantum Technologies is a full-stack quantum computing company that recently became publicly traded on the Nasdaq. The company is focused on developing quantum computers and associated software, representing a high-growth but speculative area of the technology industry. An investment in the XNDX ETF does not grant direct ownership or shareholder rights in Xanadu.
Leveraged ETFs are intended only for sophisticated investors who understand and can actively manage their risks. The funds use derivatives, such as swap agreements, to achieve their investment objectives, which magnifies both gains and losses.
The fund's objective is to match two times the daily performance of XNDU. Over periods longer than a single day, the effects of compounding can cause the fund's performance to diverge significantly from the underlying stock's return. In volatile markets, it's possible for the fund to lose money even if the underlying stock price increases over the holding period.
Providers explicitly warn that investors could lose their entire principal in a single day. For a 2x long fund like XNDX, a 50% adverse (downward) move in Xanadu's stock price on a given day would theoretically wipe out the fund's entire value.
This article is for informational purposes only and does not constitute investment advice.
