Drink three large coffees in a row and you get a buzz, maybe the jitters and an upset stomach. Trade the hottest ETF on Wall Street and you get the same effect. But nobody seems to care.

Just look at the performance of the Direxion Daily Semiconductor Bull 3X exchange-traded fund, which has big holdings in leading chip stocks like Micron, Advanced Micro Devices, and Nvidia. The fund, often referred to by its ticker symbol of SOXL, has become an increasingly popular bet for traders trying to benefit from artificial-intelligence-related demand for semiconductors.

SOXL has soared more than 210% so far this year, while the index it is based on -- the PHLX Semiconductor index (or SOX) -- is up about 70%. SOXL is designed to post three times the daily return of the index.

But much like a triple espresso, this ETF isn't for the faint of heart. SOXL, like other leveraged funds, uses swaps and derivatives to enhance daily performance, making it incredibly volatile and not for everyday investors. Its dramatic moves also happen on the downside: SOXL has plunged 56% since hitting a 52-week high in late June, while the SOX has fallen 18%.

Steve Sosnick, chief market strategist for the trading platform Interactive Brokers, explained the big gap in performance.

"Many of these funds utilize options to achieve their objectives. When volatility is high, that makes options more costly and in turn, decay more quickly," he told Barron's.

Still, the insane swings for SOXL don't seem to be deterring investors. Trading activity is indeed high. An average of 91.4 million shares have changed hands over for SOXL over the past 10 trading days and 104.4 million during the past five, compared with an average of 75.9 million shares daily so far this year, according to Dow Jones Market Data.

This demand is fueled by retail traders. Interactive Brokers noted that SOXL was the third-most actively traded ticker on its platform in the past week. The fund has been a staple of the firm's top 25 actively traded stocks and ETFs for much of this year.

"Although increased volatility is a drag on the performance of leveraged ETFs, it also spurs interest in the products," Sosnick said in a report Tuesday.

The concern with these ETFs is the possibility that retail investors are holding on to these funds and don't fully appreciate the risk of a longer-term pullback. Leveraged ETFs do have their place, mainly for day traders and institutions looking to hedge single-stock exposure or make bets on specific events, such as earnings reports.

"The combination of predominantly retail clients coupled with outsize moves in the stocks selected for these ETFs should make everyone think twice," said Ben Fulton, CEO of WEBs Investments, another ETF provider.

For its part, Direxion, the firm behind SOXL, says investors appreciate how the fund and other leveraged ETFs work -- and are more familiar with these types of tactical trading strategies than they were in past market cycles. The company also has educational resources to help traders grasp the ETF's "opportunities and risks," Jake Behan, Direxion's head of capital markets, told Barron's.

"We don't view the recent increase in activity as evidence that traders are ignoring risk," Behan said. "If anything, periods of elevated volatility tend to bring greater attention to both the risks and mechanics of leveraged ETFs."

But Sosnick says many traders are ignoring the warning labels.

"While their (presumably unread) prospectuses clearly warn that they intend only to match a multiple of the daily performance of their underlying benchmarks and risk systemic underperformance, our customers are clearly going home with long positions," Sosnick said in the report.

That's dangerous, especially as the AI euphoria continues to drive traders to leveraged tech ETFs. Earnings from big hyperscalers such as Microsoft, Amazon.com, Alphabet, and Meta Platforms have shown that spending on AI continues to surge. That should lead to strong earnings for big chip companies like Advanced Micro Devices, which posted solid results Tuesday.

Leveraged funds tied to Sandisk, Micron, the Nasdaq-100 index (or QQQ) and the iShares MSCI South Korea ETF were also in the Interactive Brokers' top 25 actively traded tickers.

Regulators are increasingly nervous, too. South Korea has apologized for approving leveraged ETFs and has recently taken steps to crack down more on them. The Securities and Exchange Commission has also blocked the filings for some funds proposing to use even more leverage to enhance daily returns.

Meanwhile, fund providers keep churning out new leveraged ETFs tied to hot stocks. Several leveraged ETFs for SpaceX and SK Hynix made their debut shortly after those two companies went public this summer. SpaceX stock fell nearly 14% Wednesday after reporting earnings, but the Leverage Shares 2X Long SPCX Daily ETF plummeted 27%.

Make no mistake: Buy-and-hold investors should steer clear. That fourth cup of morning coffee might be safer for your health.