3x leveraged fund goes to zero; investors lose everything

Core Insights - A 3x leveraged product tied to AMD has gone to zero, resulting in significant losses for investors who bet against the chipmaker following a surge in AMD's stock price after its deal with OpenAI [1][5][6] Group 1: Company Developments - AMD signed a deal with OpenAI to deliver 6 gigawatts of GPUs over the next several years, potentially generating tens of billions of dollars in revenue for AMD [5] - Following the announcement, AMD's stock surged more than 37%, benefiting AMD shareholders but adversely affecting those who were shorting the stock through leveraged products [6] Group 2: Investment Product Risks - The collapse of the GraniteShares 3x Short AMD Daily ETP serves as a cautionary tale about the risks associated with leveraged and inverse ETFs, which can magnify losses and lead to total investment loss [2][3] - A 33⅓% gain in AMD's stock resulted in a 100% loss for the 3x short product, triggering an "index cancellation redemption event" that led to the fund's liquidation [7] - Leveraged ETFs do not invest directly in underlying stocks but rather in derivatives designed to provide exposure to the stock's performance, resetting their leveraged exposure daily [8]