GraniteShares is shutting down the GraniteShares 2x Long LCID Daily ETF (NASDAQ: LCDL), and it's making history—but not the good kind. This is the first time a U.S.-listed single-stock leveraged ETF has been forced to close, and the reason is a brutal reminder of how quickly leverage can turn against you. The culprit? A 50% crash in Lucid Group Inc. (LCID) shares on Tuesday that sent the fund's net asset value (NAV) into negative territory.
The fund was designed to deliver 200% of Lucid's daily return through swap agreements. But when Lucid dropped by half, the swap counterparty had the contractual right to pull the plug. And it did. The liquidation losses were so severe that the ETF's NAV went below zero, making the fund unsustainable. As GraniteShares explained, the fund's governing documents and swap agreements allowed the counterparty to immediately close out the position if Lucid experienced an extreme one-day decline. After that, the assets weren't enough to cover obligations, leading to a negative NAV and eventual delisting from Nasdaq.
This wasn't a surprise—at least not to anyone who read the fine print. The ETF's prospectus explicitly warned that a decline of more than 50% in the underlying stock could result in losses exceeding the fund's assets and allow the swap counterparty to terminate its exposure. But warnings in a prospectus are one thing; watching it happen in real time is another.
A Cautionary Tale for Leverage Lovers
Bloomberg Intelligence ETF analyst Eric Balchunas noted that LCDL is the first termination of a U.S. 2x single-stock ETF this year, though similar closures have occurred in Europe, where products often use even higher leverage. "We have our first termination of a 2x stock ETF in the U.S. this year," Balchunas wrote on X, adding that while the fund had little in assets, the episode is "a good reminder of the vol of some of these."
Unlike leveraged ETFs that track diversified indexes, single-stock leveraged ETFs are exposed to company-specific events that can trigger dramatic one-day price swings. Because they reset leverage daily and rely on derivatives like swaps, these funds are designed primarily for short-term tactical trading, not long-term holding. When the underlying stock moves violently, the leverage can amplify losses just as quickly as gains—and in rare cases, wipe out the fund entirely.
Leveraged ETFs Keep Multiplying, Despite the Risks
The closure of LCDL comes even as issuers continue to roll out leveraged ETFs tied to individual stocks across high-growth sectors like artificial intelligence, semiconductors, and cryptocurrencies. Recent launches have included products linked to SK Hynix Inc (SKHY), Space Exploration Technologies Corp (SPCX), and memory-chip themes, reflecting strong investor demand for amplified exposure to volatile stocks.
Although LCDL represented only a small corner of the ETF market, its collapse provides one of the clearest examples yet of the structural risks associated with single-stock leveraged ETFs. The episode highlights that while these products can magnify gains, extreme moves in the underlying stock can also rapidly erode their value—and, in rare cases, force a fund's closure altogether. For investors tempted by the promise of 2x returns, it's a reminder that leverage is a double-edged sword, and sometimes it cuts both ways.
