How can I lever up my index fund returns?

Question

Suppose I am very confident that the 1 year and 5 year returns of an index-tracking ETF will be positive. How can I lever up the returns?
For example, when the ETF increases by 5%, how can I  achieve a 10% return from a 5% rise in the ETF? What financial instruments can I use to do this?
(I know that leverage will also magnify losses)

CQM · Answer

Write near term options, use the proceeds to buy LEAPS with a delta that fulfills your criteria. Or just buy any LEAPS if you are really bullish.
Disclaimer: Not financial advice, consider everything I wrote to be apocryphal.

Dbrooks · Answer

There are a few ways you might try to approach this, but you have to keep in mind that all of these options are also increasing your downside:

Leveraged ETFs - there are many 2x or even 3x leveraged ETF instruments that are structured in a way that they multiply the returns of the underlying ETFs. However you have to be aware that these types of products are mainly intended for short term trading and are not designed for "buy and hold" strategies.
Options - You can buy call options (if bullish) that allow you to control larger amount of the underlying equity with the fraction of the capital (leverage) but you have to be aware that options have expiration date and if your thesis does not materialise you will loose all of the principal.
Margin - You can buy the security on margin, if your broker allows it. This will provide you with the option to hold larger amount of the security with your capital. The risk is of course that you might get a margin call and be forced to sell at a time that might not be optimal for you.

How can I lever up my index fund returns?

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