GraniteShares 3x Short AMD ETP Terminates After Stock Surge
Leveraged Single-Stock ETP Terminates Following AMD Surge
On October 6, 2025, the GraniteShares 3x Short AMD Daily ETP Securities (XS2838543457) ceased trading and was formally terminated, with its value per security established at zero. This decisive event was triggered by a dramatic 38% surge in the shares of Advanced Micro Devices (AMD) on the same day, a move that fundamentally undermined the inverse-tracking product.
The Event in Detail
The GraniteShares 3x Short AMD Daily ETP was specifically designed to deliver three times the inverse daily performance of AMD's stock price. Its termination came after the underlying index level fell below zero, as confirmed by a notice from the Swap Calculation Agent. The substantial appreciation in AMD stock was primarily driven by the chipmaker's announcement of a new deal with OpenAI. Consequently, current holders of the ETP will receive no redemption payments, and the securities are slated for delisting in accordance with exchange procedures. Prior to its collapse, the product, which was listed in London and Italy, managed approximately $3 million in assets.
Analysis of Market Reaction
The implosion of the GraniteShares 3x Short AMD ETP serves as a stark reminder of the extreme risks embedded within highly leveraged investment products, particularly those tracking individual equities. Such instruments are acutely vulnerable to rapid, significant movements in the underlying asset, even when those movements are positive for the asset itself. The incident draws parallels to the "Volatility Panic" of 2018, where the VelocityShares Daily Inverse VIX Short-Term ETN (XIV) lost over 90% of its value in a single day. Bloomberg ETF expert Eric Balchunas characterized the recent event as an "XIV-style outcome," while Athanasios Psarofagis, an analyst at Bloomberg Intelligence, emphasized that it demonstrates the "real risk of margin calls in 3x stock ETFs." The rapid, significant appreciation in AMD shares overwhelmed the inverse mechanism of the ETP, leading to its complete erosion of value.
Broader Context and Implications
This termination occurs within a broader landscape of increasing investor appetite for complex, leveraged exchange-traded strategies. Despite explicit warnings from fund issuers that these products are not intended for long-term holdings, their popularity continues to grow. According to Morningstar, total assets in leveraged ETFs globally increased 51 percent year over year, reaching $134 billion at the end of January. However, this growth has come with significant investor losses in other single-stock leveraged funds; for example, MicroStrategy and Tesla-focused leveraged funds have seen investors collectively lose an estimated $1.7 billion due to ill-timed inflows since their November peaks. Jeffrey Ptak, a Morningstar analyst, noted, "It is like a thresher. Money goes in and it doesn't come out," underscoring the challenges of timing such volatile investments. These events highlight the inherent fragility of amplified exposure strategies, especially in dynamic market conditions.
Expert Commentary
Analysts are increasingly vocal about the dangers presented by these products. Athanasios Psarofagis stated, "I think this proves that blow-up risk is a real possibility for a 3x stock ETF," though he doubted such an event would deter all investors. Jeffrey Ptak further cautioned, "Investors may not fully appreciate how quickly or severely leveraged funds' performance can veer off course." Todd Sohn, senior ETF analyst at Strategas Securities, commented on the inevitability of such occurrences, stating, "Single-stock blowups are practically inevitable, especially in today's fast-paced environment." He further questioned, "The question is: when does it arrive in the US, a much larger market?" These expert opinions collectively underscore the amplified risks and potential for significant capital impairment inherent in these high-leverage vehicles.
Looking Ahead
The termination of the GraniteShares 3x Short AMD ETP arrives at a critical juncture, as several issuers, including GraniteShares itself, Defiance ETFs, ProShares, and Direxion, have filed applications with the U.S. Securities and Exchange Commission (SEC) to launch 3x leveraged single-stock ETFs in the U.S. market. While such products already exist in Europe, the U.S. regulatory environment has historically placed stricter limits on leverage for ETFs. The recent incident serves as a potent warning for both regulators and investors regarding the potential for rapid and complete capital loss in these instruments. The ongoing regulatory review of these applications and the market's reaction to future highly leveraged products will be closely watched, as the potential for further "blow-ups" remains a significant concern, particularly with the continued influx of retail participation driven by social media hype and short-term performance aspirations.
Edgen Stock·Oct 13 2025, 13:13
