SPXL vs. SPXS: Pros and Cons of 3× Bull and Bear
As volatility and geopolitical risks persist into 2025—now under President Trump’s renewed tariff pressures—traders and investors alike are seeking tools to navigate choppy markets. Direxion’s leveraged ETFs, SPXL (3× Bull) and SPXS (3× Bear), offer magnified exposure to the S&P 500 but in opposite directions. Below, we outline their key advantages and drawbacks to help you decide which might fit your strategy.
What Are SPXL and SPXS?
SPXL (Direxion Daily S&P 500 Bull 3× Shares)
Seeks daily investment results of 300% of the S&P 500’s performance, before fees and expenses
SPXS (Direxion Daily S&P 500 Bear 3× Shares)
Seeks daily investment results of –300% (inverse 3×) of the S&P 500’s performance, before fees and expenses
.
Both funds rebalance daily, meaning they are designed for short-term tactical trades rather than long-term holds
Pros
Strong Liquidity & AUM
With over $3 billion in AUM and multi‑million share daily volume, SPXL offers tight bid‑ask spreads and easy execution
Bullish Leverage
In a rising market—especially if the Fed cuts rates—SPXL can generate amplified gains, capturing 300% of the S&P 500’s upside on a daily basis
Cost‑Effective for Short‑Term
Its expense ratio (0.87%) is competitive among 3× leveraged ETFs, helping to preserve returns when markets move in your favor
Cons
Compounding & Tracking Risk
Daily rebalancing leads to compounding effects; over multiple days, returns can deviate significantly from 3× the index due to volatility decay
High Volatility
Gains and losses are magnified; a 1% move in the S&P 500 translates to a 3% move in SPXL, making it unsuitable for low risk‑tolerance investors
Not for Buy‑and‑Hold
SPXL is designed for intraday or very short‑term trades. Holding it unmonitored can lead to unexpected losses if market conditions reverse
Pros
Powerful Downside Hedge
SPXS offers 300% inverse exposure, enabling traders to profit from, or hedge against, market downturns without a margin account
Exceptional Liquidity
With nearly 80 million shares traded daily, SPXS ensures swift execution even in stressed markets
Short‑Term Risk Management
In volatile or bearish environments, SPXS can protect portfolios by offsetting losses in long positions.
Cons
Compounding & Tracking Risk
Like SPXL, daily rebalancing introduces volatility drag. Over time, SPXS may underperform –3× the index due to compounding effects
High Cost
A 0.93% expense ratio can erode returns, especially if markets don’t move decisively downward
Unsuitable for Long‑Term
SPXS is intended for tactical trades. Holding it through choppy markets can lead to significant losses if the index rallies unexpectedly.
When to Use Each ETF
Scenario Recommended ETF
Short‑Term Bullish Outlook SPXL
Short‑Term Bearish or Hedging Needs SPXS
Long‑Term Passive Investment Neither; consider non‑leveraged ETFs
Active Traders can use SPXL to capitalize on upside momentum and SPXS to hedge or profit from downturns. Both require daily monitoring and disciplined entry/exit rules.
Long‑Term Investors should avoid these due to compounding risks and elevated expense ratios. Passive, non‑leveraged index funds are more appropriate.
Tickeron and Financial Learning Models (FLMs)
Tickeron, under the leadership of Sergey Savastiouk, CEO, has been pioneering the integration of AI into financial markets through its Financial Learning Models (FLMs). These models merge advanced technical analysis with artificial intelligence to enable traders to detect market patterns with greater precision. Among Tickeron’s key offerings are user-friendly trading bots designed for beginners, high-liquidity stock robots for efficient trade execution, and real-time AI insights that promote transparency and control. Complementing these tools are the Tickeron AI Trading Bots and Double Agents—powerful features that help identify both bullish and bearish market signals, giving traders a dual perspective for balanced decision-making. By leveraging machine learning, Tickeron continues to enhance the capabilities of AI-powered trading, aligning with the broader trend of AI's expanding role in financial decision-making.
Conclusion
SPXL and SPXS offer sophisticated traders powerful tools to amplify their market exposure on both sides of the S&P 500. SPXL shines in bullish, short‑term scenarios with strong liquidity and a relatively low expense ratio. SPXS serves as an effective hedge or profit vehicle in bearish markets, boasting exceptional trading volume. However, both carry significant risks—daily compounding, high volatility, and fees—that make them unsuitable for buy‑and‑hold investors. Understanding these pros and cons is essential before deploying either 3× ETF in your portfolio.