Banks Offload Risk from Leveraged ETFs with ‘Crash Puts’

Investment banks and hedge funds are trading derivatives known as "crash puts" to hedge risks tied to leveraged exchange-traded funds that amplify daily stock returns, according to Bloomberg. Leveraged ETFs allow investors to double or triple the daily returns of individual stocks. The derivative trading activity has increased as these financial institutions manage exposure to the volatility of leveraged ETF movements.

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