A distinguishing feature of Leveraged Shares ETPs is that all of the products are physically backed. A $100 investment in one of our ETPs gives the investor an exposure worth $200 to the underlying security (excluding fees), as Leverage Shares invests all of the cash proceeds in the securities being tracked.
If the 2x ETP has $100 in net assets, $200 of net exposure to the ETP assets needs to be maintained.2. Underlying stock price increases by 5%
When the index rises 5% during the trading day, the ETP rises by twice that amount (10%) and the total exposure to the ETP rises to $210.3. ETP exposure modified
As exposure needs to be two times that of the ETP assets ($110 x 2 = $220) at the beginning of each trading day, an additional $10 of underlying securities must be purchased to maintain the needed exposure of 2x.In the opposite scenario, where the ETP value falls to $90 due to a 5% decline in the underlying stock (meaning a $10 fall in ETP value), the exposure would fall to $190 during the day. Thus, to maintain the 2x multiple, the total exposure to the ETP would need to be reduced by $10 ($90 x 2 = $180).
So where does the additional capital for the needed leverage come from? When an ETP is issued, that entire proceeds plus a matching margin loan provided by Interactive Brokers is invested in the underlying security (stocks like Amazon and Netflix). Moreover, additional cash proceeds (like dividends received from the underlying securities) are also invested to purchase additional securities. In this manner, the 2x ETPs are always fully collateralized.
SOURCE: 1. Wisdomtree, “SHORT & LEVERAGED ETPs Global Flows”, December 2019.
Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.
Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.
Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.
Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.
Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.
Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.
Julian joined Leverage Shares in 2018 as part of the company’s premier expansion in Eastern Europe. He is responsible for web content and raising brand awareness.
Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.
For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.
Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.
He joined LS from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.
Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.
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