Futures options traders work on the NYSE American (AMEX) of the New York Stock Exchange on February 6, 2026 in New York City, USA.
Brendan McDermid | Reuters
Speculative investment vehicles have become increasingly popular since the Covid pandemic as more retail traders have entered the market, according to upcoming data shared exclusively with CNBC.
Leveraged and inverse funds are expected to record an average daily trading volume of 1.41 billion in 2025, according to a report from exchange-traded fund manager Direxion released on Tuesday. That’s an increase of more than 130% from 2024 and 250% from 2020, the company noted.
Leveraged funds aim to use derivatives to increase the return of an underlying asset, but they can also magnify losses. Inverse funds aim to provide investors with the opposite performance of an underlying asset.
According to Direxion, the average daily options volume is expected to reach 58 million in 2025. This number represents an increase of approximately 26% year-on-year and is more than double what it was in 2020.
“People have gotten really smart about investing and investing in complex vehicles,” Direxion CEO Douglas Yones said in an interview with CNBC.
According to Direxion, daily volumes in leveraged funds and options trading increased at average annual rates of 29% and 16%, respectively, between 2020 and 2025.
In comparison, inventory volume grew by 10% annually. Of course, stocks still dwarf leveraged funds and options when it comes to market volume.
Direxion’s report may indicate increasing demand for instruments that allow investors to take on more risk. It also follows the investment boom among retail investors during the pandemic, which has now made small traders a crucial force in financial markets.
The market for leveraged funds is growing
Last year was an important year for leveraged funds, Direxion said in the report.
That’s partly because everyday traders had more choices in this area. According to the report, the total number of active leveraged funds increased by 50% in 2025, marking the largest annual increase since 2007. About four out of five leveraged funds in the U.S. track stocks, the firm said.
Additionally, Yones said Direxion has seen increasing interest in lesser-known leveraged funds over the past year. He said for example: Daily South Korea Bull 3X Stocks (KORU) gained traction as the Asian country’s market recovered.
According to the report, investors set records for volume and turnover in leveraged funds in April as President Donald Trump’s tariff policies sent markets into a tailspin.
This was part of a pattern over the last year in which traders invested in leveraged bull funds after significant market declines, Yones said. This type of dip buying helped deliver record returns for retail traders in 2025.
Still, Yones said clients tend to have small amounts in leveraged funds compared to more traditional investments. Market participants should view leveraged funds as “satellite” positions in their portfolios and research them before investing, he said.
Yones’ team said it is difficult to predict whether leveraged funds can grow at the same pace in the future. However, he said demand should continue as traders view these products as a means of recovery after market declines.
“We’re in a world where we get these massive anecdotal statements, particularly around policy, that will move the market in the very short term, and then the market recovers,” Yones said. “The investors are getting smart.”