Futures and options traders work on the NYSE American (AMEX) floor of the New York Stock Exchange on February 6, 2026 in New York City, USA.
Brendan McDiarmid | Reuters
Speculative investment tools have skyrocketed in popularity as more retail traders enter the market since the coronavirus pandemic, according to upcoming data shared exclusively with CNBC.
The average daily trading volume of leveraged and inverse funds is expected to reach 1.41 billion in 2025, according to a report released Tuesday by exchange-traded fund manager Direxion. This is an increase of more than 130% from 2024 and more than 250% from 2020, the company found.
Leveraged funds use derivatives to increase returns on the underlying assets, but they also have the potential to amplify losses. Inverse funds aim to provide investors with the opposite performance of the underlying asset.
According to Direxion research, average daily options trading volume is expected to reach 58 million by 2025. This number reflects an increase of approximately 26% year over year and is more than double that of 2020.
“People are getting much smarter about investing and investing in complex vehicles,” Direxion CEO Douglas Yones said in an interview with CNBC.
According to Direxion research, daily trading volumes for leveraged funds and options trading grew at a compound annual rate of 29% and 16%, respectively, from 2020 to 2025.
In contrast, inventories increased at an annual rate of 10%. Indeed, in terms of market volume, stocks still dwarf leveraged funds and options.
Direxion’s report could signal growing demand for products that allow investors to take on more risk. It also follows an investment boom among retail investors during the pandemic, after which mom-and-pop traders became a significant force in financial markets.
Leveraged fund market grows
Last year was a big year for leveraged funds, Direxion said in a report.
Part of the reason is that everyday traders had more options in this area. The total number of active leveraged funds increased by 50% in 2025, the largest annual increase since 2007, according to the report. About four out of five leveraged funds in the U.S. track the stock, the firm said.
In addition, Yones said Direxion has seen an increase in interest in lesser-known leveraged funds in the last year. For example, he said Daily Korea Bull 3X Shares (KORU) It gained momentum as the Asian country’s market recovered.
Investors set records for leveraged fund volume and volume in April as President Donald Trump’s tariff policies depressed markets, according to the report.
Yones said this was part of a pattern last year in which traders invested in leveraged bull funds in the wake of significant market declines. This style of push-buying helped drive significant returns for retail traders in 2025.
Still, Yones said clients tend to invest smaller amounts in leveraged funds compared to traditional investments. He said market participants should consider leveraged funds as “satellite” positions within their portfolios and research them before investing.
Yones’ team said it’s difficult to predict whether leveraged funds will be able to grow at the same clip in the future. But he said demand will hold up because traders see these products as a tool to ride rebounds after market declines.
“We’re in a world, especially when it comes to politics, where huge, idiosyncratic statements are made that move the market in the very short term, and then the market rebounds sharply,” Yones said. “Investors are getting smarter about that.”
