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More broadly this seems a bearish position. The real risk isn’t overnight holdings per se, but extended holding periods in volatile markets.
ISTM the issue is that these 3X leveraged ETFs reset their exposure daily. This daily resetting creates “volatility decay” or “path dependency,” which means that over multiple days, the ETF’s performance won’t simply be -3X the underlying index’s performance.
IANAFinancial advisor. Lots of other ways to say trading is risky and do not rely on anything I say about it.