During that period, the commodity market experienced intense volatility, attracting many traders' attention to a special type of financial instrument—leveraged commodity ETFs. These products allow investors to amplify returns through leverage, but the risks are also a double-edged sword.

What was the background at that time? Post-pandemic, global commodity prices had been soaring, from agricultural products to energy, almost reaching new highs across the board. Supply chain disruptions, port congestion, and surging demand all compounded. Later, the outbreak of the Russia-Ukraine conflict made things worse. Russia and Ukraine together supply about one-third of the world's wheat and barley, and one-fifth of the corn trade. In terms of energy, Russia is even more critical—17% of global natural gas production and 12% of oil production come from there, and 40% of Europe's natural gas imports also depend on Russia. Plus, with industrial metals like nickel, aluminum, and copper, Russia's output accounts for a significant share of the global supply.

During that time, the Bloomberg Commodity Index soared to a multi-year high of $132.63, mainly driven by oil, gas, and industrial metals futures. Later, with optimistic expectations for peace negotiations, the index retreated somewhat. In this period, leveraged commodity ETFs became favorites among traders, especially among those betting on declines.

The five most watched leveraged commodity ETFs at that time were: ProShares UltraShort Bloomberg Crude Oil (SCO), which attracted $398 million in net inflows; Horizons BetaPro Natural Gas -2x Daily Bear ETF (HND), with $96 million; ProShares Ultra Gold (UGL), bringing in $89 million; Horizons BetaPro Crude Oil Inverse Leveraged Daily Bear ETF (HOD), with $44 million; and ProShares UltraShort Gold (GLL), which received $8.8 million.

SCO is particularly interesting—it aims to track twice the inverse of the Bloomberg Commodity Balanced WTI Crude Oil Index's daily return. Simply put, if the index rises 1% in a day, SCO would fall 2% (excluding fees). At that time, WTI crude oil futures hit a 13-year high, and many bearish traders used SCO to bet on a price correction. The expense ratio for this product is 0.95%, and it is mainly traded on NYSE Arca.

The appeal of these leveraged commodity ETFs lies in their ability to quickly magnify gains, but it’s important to remember that risks can also be amplified just as rapidly. The market environment at that time indeed provided a stage for these tools to perform.