How does “leveraging” work in leveraged ETFs?

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For example, leveraged ETFs like TQQQ and SQQQ have an investment goal of approximately 3x the return (or inverse) of the Dow. What’s the mechanism with which they leverage the cash to achieve these higher returns?

In: Economics

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Anonymous 0 Comments

Either margin, options, or futures. Depending on the product. Key takeaway is that these are made to make a 2x or 3x DAILY move. So normally will not be suitable for the long term.