UPRO: Deleveraging Is Smart In Today's Market

Binary Tree Analytics
5.15K Followers
(8min)

Summary

  • Leverage magnifies returns but causes significant losses in volatile markets; UPRO is down -25% in 2025 compared to the S&P 500's -6%.
  • Beta slippage exacerbates losses in volatile markets, making ProShares UltraPro S&P500 unsuitable for long-term holding in current conditions.
  • The S&P 500's high P/E ratio and potential earnings adjustments indicate limited upside and significant downside for UPRO.
  • The fund is best used as a day trading tool in bear markets, not for buy-and-hold strategies.

Man pushes a huge orb

Daniel Grizelj

Thesis

One of the hard learned lessons of the current market swoon should be that leverage can provide for sleepless nights. When the market moves by -1%, a 2x leveraged vehicle moves by -2%, while a 3x leveraged one provides for -3% downside. The ProShares UltraPro

This article was written by

5.15K Followers
With an investment banking cash and derivatives trading background, Binary Tree Analytics ('BTA') aims to provide transparency and analytics in respect to capital markets instruments and trades. BTA focuses on CEFs, ETFs and Special Situations, and aims to deliver high annualized returns with a low volatility profile. We have been investing for over 20 years after obtaining a Finance major at a top university.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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