Leveraged ETFs MSTX and MSTU on MicroStrategy face huge losses due to volatility and daily reset effects.

The leveraged ETFs MSTX and MSTU, which aim to deliver twice the daily move of MicroStrategy (MSTR) stock, have suffered severe losses, dropping about 95% over the past year compared to MSTR's 67% decline. These ETFs use daily reset mechanics and synthetic exposure via swaps and options, which cause volatility decay and tracking errors, especially during choppy trading. MSTX has a larger asset base but higher fees, while MSTU offers a lower expense ratio. Both are better suited for very short-term trades, as holding them longer leads to significant value erosion unless MSTR enters a smooth, sustained uptrend.