Issuers of leveraged Nvidia ETFs saw a surge in bearish trading ahead of earnings. By Reuters

By Suzanne McGee

(Reuters) – Interest in leveraged exchange-traded funds that allow investors to profit when Nvidia (NASDAQ: ) shares fall rose steadily ahead of the chipmaker’s quarterly results, according to data from some of the companies that issued the products.

Nvidia, which in June eclipsed Microsoft (NASDAQ: ) as the world’s most valuable company, dominates the major stock indexes, making its quarterly results an increasingly high-stakes market event.

In a sign of investor anxiety about Nvidia’s ability to beat rising earnings expectations, the number of shares outstanding in leveraged inverse ETFs that offer a bearish view of the chip maker rose much faster in recent months than those that offer an optimistic exposure, issuer data shows.

These bear products are structured to provide daily returns of twice any loss in Nvidia itself, while bullish ETFs use derivatives to double any daily gains.

“You can read into this data the changing sentiment about Nvidia’s outlook,” said Will Rhind, CEO of GraniteShares. “As Nvidia becomes more volatile, it looks like we’re seeing more interest in taking a position in the bear ETF.”

Shares of Nvidia fell after its quarterly forecast fell short of investors’ lofty expectations.

The number of shares outstanding in the GraniteShares 2x Short NVDA Daily ETF rose 446% between May 21 — just before Nvidia released its previous quarterly earnings — and Wednesday, when the chipmaker released its latest results .

That compares to a gain in outstanding shares of just 85% for its leveraged product, the GraniteShares 2x Long NVDA Daily ETF.

The discrepancy is even more pronounced in similar ETFs issued by REX Shares and Tuttle Capital Management. The number of shares outstanding in the T-Rex 2x Inverse Nvidia Daily ETF has increased tenfold since Nvidia’s May earnings report.

There are also leveraged ETFs linked to other widely traded stocks, such as Alphabet (NASDAQ: ) and Microsoft, but the largest and most active are based on Nvidia and Tesla (NASDAQ: which reflects the high profile and volatility of both companies’ shares.

Some new investors drawn to bearish leveraged ETFs may be concerned about Nvidia’s volatility as each earnings report raises expectations, said Scott Acheychek, chief operating officer of REX Financial. Others see ETFs as a way to hedge underlying long positions or manage tax liabilities.

To be sure, bullish products still dominate leveraged Nvidia ETFs in size and growth as measured by dollar value. The GraniteShares 2x Long NVDA Daily ETF has $6 billion in assets and attracted $2.95 billion in inflows over the past three months, according to data from VettaFi.

His two-time bear ETF, despite its dramatic relative growth, has just $69 million in assets, though it has attracted $63 million in inflows over the past three months.