ONG delivers 2x daily leverage to ON Semiconductor (ON), a major power and sensing semiconductor company. This single-stock ETF lets traders make amplified directional bets on ON's chip business without using options or margin.
How It Works
The fund uses total return swaps to achieve 200% daily exposure to ON Semiconductor's stock price movements. It resets leverage daily at market close, meaning a 1% move in ON translates to roughly 2% for ONG that day. The fund holds cash collateral and swap agreements rather than actual ON shares, with counterparty risk managed through major investment banks.
Key Features
- Pure-play 2x leverage on ON Semi, a $30B+ chipmaker focused on automotive and industrial markets
- No options decay or margin calls — just daily compounding risk to manage
- Trades like a stock with intraday liquidity, unlike futures that require special accounts
Risks
- Daily compounding can destroy returns — a 10% drop then 11% rise in ON leaves you down 1.2% in ONG
- Single-stock concentration means sector headwinds or ON-specific issues hit twice as hard
- Volatility decay eats 10-20% annually in choppy markets — holding beyond days is usually costly
Who Should Own This
Built for semiconductor traders with high conviction on ON's near-term direction — think earnings plays or technical breakouts. The 2x leverage amplifies gains on correct calls but demands tight stop-losses. Anyone holding more than a week is likely using the wrong tool, as compounding math favors short, decisive trades over buy-and-hold.