Explore one variable — the shape of the index path: last day = today (small dip)
Daily reset and volatility decay: why 3x a day is not 3x over time the index's path 5 days · today = last, small dip + − + − − today: small dip the 3× daily-reset engine low 3× NAV swap-based exposure reset to 3× NAV — every close tomorrow starts fresh at 3× sells exposure ≈3× the day's move TQQQ ≈3× the index's move lands here each close compounds day by day the compounding result today volatility drag — widens with days and chop
tqqq, compounded daily reset 3× the index, naive index, reference
Daily reset: 3× a day is not 3× over time. The same close-time rebalance that turns today's small dip into a roughly 3× TQQQ dip also forces the fund to buy exposure after up days and sell after down days — over a choppy path that churn compounds into drag, while a calm drift barely moves it. Modest context: reset is issuer-documented, and TQQQ is up about +37% YTD versus roughly +50% implied by 3× QQQ's ~+16.7%; over about 20 days it compounded ~+2.8% versus ~+4.9% implied. The reset drag does not explain the whole gap — the fund's expense ratio is part of it.