Banks Offload Risk from Leveraged ETFs With Exotic ‘Crash Puts’

Banks are using exotic financial instruments called 'crash puts' to transfer risk away from leveraged ETFs, which are investment products designed to amplify daily stock returns by 2x or 3x. These hedging strategies allow financial institutions to protect themselves while retail investors remain exposed to the significant dangers of these volatile instruments. The practice highlights the inherent riskiness of leveraged ETFs and raises questions about how risk is distributed in the financial system.