Introduction to LETPs and other Structured Products
What they are & why they matter
LETPs (Leveraged and Inverse Exchange-Traded Products) are engineered to deliver 2x, 3x, or -1x to -3x the daily returns of an index like the S&P 500 or Nasdaq 100. That “daily” part? It’s not a footnote — it’s the entire trick.
Example: If the Nasdaq 100 rises 1% today, TQQQ aims to rise 3%. If it drops 1%, SQQQ aims to rise 3%. Simple, right?
Not exactly.
Unlike traditional ETFs, LETPs reset daily, making them path-dependent — meaning their performance isn’t just about where the market goes, but how it gets there. Over time, especially in choppy or sideways markets, this structure creates compounding decay. Translation: they’re mathematically wired to lose if held too long.
So here’s the question no one else asks:
Why would anyone design a product this way? And why would the SEC ever approve it for retail investors and retirement accounts?
The answer: because it transfers your money to someone else — quietly, daily, and legally.
We’re not just here to expose that system — we’ll show you how to turn it against itself.
Types of Structured Fraud – Exploitable for Profit
LETPs are a category of Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) that use synthetic leverage to magnify daily price movements of an index, commodity, or financial asset.
01
Leveraged ETFs/ETNs
Seek to provide 2x or 3x the daily return of an index.
02
Inverse LETPs
Designed to profit from market declines by moving in the opposite direction of an index.
03
Covered Call - ETFs
Claim to benefit investors by generating income - the truth is more sinister
While these products are marketed as sophisticated trading tools, their daily compounding mechanism leads to severe losses over time, even when the underlying index moves sideways or up.
The Fraud Mechanism: Why LETPs Are Designed to Fail
Wall Street’s appetite for profit knows no bounds, and leveraged exchange-traded products (LETPs) are at the center of this scheme. Characteristics that enable the transfer of your money to the worst of Wall Street.
02
Reverse Splits: The Hidden Reset Button
To keep LETPs tradable and attractive, issuers routinely execute reverse stock splits — a cosmetic maneuver that artificially inflates the share price after catastrophic declines. They consolidate the share count, reset the price, and then quietly issue more shares as the decay resumes.
It’s financial alchemy: take a dying product, repackage it, and sell it again.
Example: SQQQ
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In 2020, SQQQ (3x inverse Nasdaq) traded around $30/share.
-
After repeated decay, it fell to under $5/share — the danger zone for delisting.
-
The issuer performed a 1-for-10 reverse split, taking 10 worthless shares and turning them into 1 “new” share at $50.
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A few months later, the product was back below $20, and the cycle repeated.
Each time, investors think they’re buying a rebounding asset. In reality, they’re buying the same decaying structure with a fresh coat of paint.
It’s not a reset — it’s a rerun. And Wall Street profits from every episode.
01
The Daily Reset Trap
Unlike traditional investments, LETPs reset daily, meaning their performance over time does not align with the underlying index. This results in a phenomenon called decay, which systematically erodes their value over time. "If I sell you snake oil that doesn’t cure cancer, is it really any different from selling investors a financial product designed to trend toward zero?"
Example:
Example: TQQQ vs. SQQQ
Let’s say the Nasdaq 100 trades flat over a 30-day period — up 2%, down 2%, repeating in choppy waves.
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You might expect TQQQ (3x long Nasdaq) and SQQQ (3x inverse Nasdaq) to cancel each other out.
-
In reality, both will lose value due to volatility drag.
Even if the index ends exactly where it started, the math inside each LETP causes compounded daily losses. The more volatile the market, the greater the decay.
Over time, LETPs become a zero-sum game with a built-in house edge — and the house isn’t you.
03
Systematic Wealth Transfer
LETPs do not create value for investors in aggregate. Instead, they are structured to systematically transfer wealth from retail traders to Wall Street institutions through:
Embedded Decay - Every Dollar you Lose is a Dollar Wall Street Gains
Misleading marketing emphasizing short-term gains
Regulatory loopholes that allow them to be widely sold despite high risks
How to Protect Yourself from LETPs
Disguised as sophisticated trading instruments, these products are mathematically engineered to transfer wealth from retail investors to institutional players — not occasionally, but systematically.
Since LETPs are not designed for long-term investment, retail investors should be cautious before buying these products. Consider shorting the paired product - at least math is on your side if you do.
01
Avoid Holding LETPs
Long-Term
Products with “Leveraged” or “Inverse” in their name; high expense ratios and daily reset mechanisms and a history of reverse splits, which signal long-term underperformance.
02
Identify Red Flags in Investment Portfolios
03
Consider Safer Investment Alternatives
Rather than LETPs, investors should focus on: Traditional ETFs tracking stable indexes; Long-term diversified portfolios and Direct investment in companies with strong fundamentals. If you want leverage there are far better ways than LETPs
Introduction to LETPs & other Structured Products
What they are & why they matter
Leveraged Exchange Traded Products (LETPs) are complex financial instruments 'designed' to appear to amplify returns on an underlying index or asset—often doubling or tripling the daily performance. While they may seem like powerful trading tools, LETPs are mathematically structured to decline over time, making them one of Wall Street’s most deceptive financial products. Investors are left playing 'hot potato', are you one of them?
The Fraud Mechanism: Why LETPs Are Designed to Fail
Wall Street’s appetite for profit knows no bounds, and leveraged exchange-traded products (LETPs) are at the center of this scheme. Learn how these products are:
01 The Daily Reset Trap
Unlike traditional investments, LETPs reset daily, meaning their performance over time does not align with the underlying index. This results in a phenomenon called decay, which systematically erodes their value over time. "If I sell you snake oil that doesn’t cure cancer, is it really any different from selling investors a financial product designed to trend toward zero?"
Example:
If an index gains 10% on Day 1 and loses 10% on Day 2, a standard investor breaks even.
A 2x leveraged ETF, however, gains 20% on Day 1 and loses 20% on Day 2—resulting in an overall loss instead of breaking even.
Over weeks and months, these losses accumulate, ensuring that LETPs steadily decline in value.
02 Reverse Splits:
The Hidden Reset Button
To keep LETPs tradable and attractive, issuers execute reverse stock splits, artificially inflating prices after significant losses, consolidating the share count and then simply reissue the consolidated shares and more!
Example:
An LETP that falls from $100 to $5 may undergo a 1-for-20 reverse split, bringing its price back to $100.
This allows issuers to issue new shares at $100 freely. Without reverse splits, products like UVXY, BOIL, JDST, SQQQ, DUST, and SOXS would be worth mere fractions of a penny.
03 Systematic Wealth Transfer
LETPs do not create value for investors in aggrigate. Instead, they are structured to move money from retail traders to Wall Street institutions through:
Embedded Decay - Every Dollar you Lose Enriches Wall Street.
Misleading marketing emphasizing short-term gains.
Regulatory loopholes that allow them to be widely sold despite high risks.
How to Protect Yourself from LETPs
Wall Street’s appetite for profit knows no bounds, and leveraged exchange-traded products (LETPs) are at the center of this scheme.
01
Avoid Holding LETPs
Long-Term
Since LETPs are not designed for long-term investment, retail investors should be cautious before buying these products. Consider shorting the paired product - at least math is on your side if you do.
02
Identify Red Flags in Investment Portfolios
Products with “Leveraged” or “Inverse” in their name; high expense ratios and daily reset mechanisms and a history of reverse splits, which signal long-term underperformance.
03
Consider Safer Investment Alternatives
Rather than LETPs, investors should focus on: Traditional ETFs tracking stable indexes; Long-term diversified portfolios and Direct investment in companies with strong fundamentals. If you want leverage there are far better ways than LETPs
Types of Structured Fraud: Exploitable for Profit
LETPs are a category of Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) that use leverage to magnify daily price movements of an index, commodity, or financial asset.
01
Leveraged ETFs/ETNs
Seek to provide 2x or 3x the daily return of an index.
02
Leveraged ETFs/ETNs
Seek to provide 2x or 3x the daily return of an index.
03
Inverse LETPs
Designed to profit from market declines by moving in the opposite direction of an index.
04
Covered Call - ETFs
Claim to benefit investors by generating income - the truth is more sinister
While these products are marketed as sophisticated trading tools, their daily compounding mechanism leads to severe losses over time, even when the underlying index moves sideways.