Shorting Leveraged ETFs: The Role of Borrowing Costs and Rebalancing in Volatility-Decay Strategies Leveraged ETFs provide amplified exposure to an underlying index, but their daily reset mechanism creates volatility drag, which can substantially reduce their long-term value. This raises the possibility of exploiting the effect by simultaneously shorting leveraged ETFs with opposite exposures. We examine a 50/50 short portfolio of TQQQ and SQQQ, which provides approximately neutral exposure to the Nasdaq-10 ...