A leveraged ETF is a security that uses financial derivatives and debt to amplify the returns of an underlying index. While a traditional ETF usually tracks the securities in its underlying index on a one-to-one basis, a leveraged ETF aims for two or three times amplification of the securities it holds.
Besides tracking an underlying index, a leveraged ETF might use financial products and debt to magnify returns. The main objective of leveraged ETFs is to generate daily returns that are multiples of the performance of the underlying index.
