I use TQQQ (3x leveraged ETF) as an aggressive growth vehicle to grow the account fast. This leveraged instrument goes up 3 times when Nasdaq goes up, but it also goes down 3 times when the Nasdaq goes down. So drawdowns can be brutal. This ETF is also not supposed to be a long term holding instrument due to a drag caused by rebalancing decay.
So, you do not want to hold it forever or you want to trade it to avoid down days or significant sell offs and drawdowns. Here is what the ETF would look like compared to its underlying investment:
Although the charts look impressive, you can see a brutal decline which erased all gains despite sharp recovery after that. The problem is not that it dropped hard and then recovered. The problem is that people cannot stomach it. You look at the chart and think, “yeah, no big deal, just hold.” But if your investment suddenly erases 60% or 70% of your investment, people panic and sell.
Another issue you can see that the calculator I used above calculated returns during the strong secular bull market with low volatility. But enter a high volatility bear market and decay will start destroying the value of your investment. There fore, we must use TQQQ tactically and get out when the markets are heading to a trouble.
I use volatility metrics to detect increasing volatility along with a 50 day MA trend following to determine when to get out and when to get back in. Sometimes the signals are choppy but no one will ever know when a “get out” signal is just another “chop” or a true disaster coming event. So I would rather get chopped out when it matters than holding the bag.
Another feature I use to reduce risk is that I buy LEAPS (and sell covered calls) to reduce risk. It is a strictly superior risk-controlled construction. What I do here is a synthetic equity + income overlay that directly addresses both decay and drawdown risk, while preserving upside convexity.
I am opening a new LEAPS trade:
Here is our today’s trade:
Buy to Open 1 TQQQ January 15, 2027 (367 DTE) 45 call with delta 0.72 for 19.40 ($1,940.00)
Now we can start selling covered calls:
01/12/2026 STO 1 TQQQ Jan 16, 2026 58 call for 0.32 credit (ROLLED)
We will let the covered call expire unless we need to adjust it.
I rolled the covered call to later expiration and lower to collect more premium as the markets were sliding and the LEAPS were losing money:
01/14/2026 STO 1 TQQQ Jan 23, 2026 56 call for 0.78 credit (OPEN)
Here is a tracker in my spreadsheet:
When the volatility signal tells me to get out, I will liquidate the entire position (LEAPS and CC) and get in cash. Right now, the signal is to stay in and ride it up.
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