Wipeout or windfall could hinge on a single decision. The "casino-ification" of the U.S. stock market that "Oracle of Omaha" Warren Buffett has long warned about has gained yet another example.

Wall Street recently rolled out an exchange-traded fund (ETF) that further blurs the line between investing and gambling.

This month, Roundhill Investments, an ETF issuer focused on innovative financial products, launched the Roundhill S&P 500 Target 10000 2030 ETF. The fund essentially gives investors a long-term leveraged bet on whether the S&P 500 can keep climbing.

Needs at least 8% annual gains

Under the contract, the fund holds options contracts, and its net asset value rises or falls based on the value of those options. The options are linked to ETFs that track the S&P 500. As the index moves closer to 10,000, the value of the options will most likely rise, and the probability of profiting from exercise increases accordingly. As time passes and expiration approaches, the options will continuously lose value. Time decay for long-dated options is relatively slow. Remaining time to expiration and the volatility of the underlying index are the two core variables driving the price of this ETF.

If the S&P 500 is above 10,000 on the options' expiration date of January 10, 2030, those options will generate substantial returns. If the index fails to hit that level, the options will expire worthless.

On Monday, the ETF fell 0.26%, while the S&P 500 declined 0.06%.

Drew Pettit, chief investment officer at Roundhill Investments, said the options currently give the ETF roughly 5.5 times embedded leverage. The fund's early performance offers a direct illustration of its volatility profile: FactSet data shows that on October 2, when the S&P 500 rose 0.7%, the ETF gained 7.4%; on October 8, when the S&P 500 fell 0.5%, the ETF dropped 4.9%.

In recent years, ETFs that use options and other derivatives to give investors leveraged exposure to indexes, individual stocks or assets have proliferated. But the vast majority of these products are aimed at day traders and use daily reset leverage mechanisms. Unlike the hundreds of earlier leveraged and inverse ETFs, this Roundhill ETF was designed from the outset as a long-term leveraged bet on the trajectory of the S&P 500.

The S&P 500 had posted double-digit gains for three consecutive years and set another record high earlier this month, making the 10,000 target look within reach to many investors. To reach that level, the S&P 500 would only need to achieve an annualized compound growth rate of about 8%. Dow Jones market data shows this is slightly above the long-term historical average: since 1928, the S&P 500's price compound return excluding dividends has been 6.4%.

Essentially akin to gambling

Dave Nadig, president and director of research at ETF.com, analyzed that the fund is like a prediction market, letting investors place a "binary wager" on a preset outcome, which is the source of its speculative nature. But because the leverage is in long-term form and packaged as an ETF product, potential buyers can easily underestimate the risk. "This is a very strange way to participate in the market. It's gamified investing," Nadig said.

Leveraged ETFs are generally high-risk and highly volatile, but their numbers have exploded over the past few years. At the same time, a growing number of speculative products has fueled a new wave of ETF issuance. Nadig said that from the perspective of industry culture and marketing, many new product developments in the ETF industry over the past year have carried highly speculative characteristics, resembling gambling. "Now there are people in the market trying to embed gambling into every corner of the financial markets. I strongly oppose it," he said.

Last month, Berkshire Hathaway announced that Warren Buffett would step down as chairman, transition to honorary chairman of the Nebraska-based Omaha company, and remain on the board. After six decades through ups and downs, he has become an iconic figure in investing, and his value investing philosophy has become a classic. During his tenure, Berkshire Hathaway achieved a compound annualized return of nearly 20%, while the S&P 500's annualized return over the same period was only 10%.

A review by this reporter found that Buffett also mentioned index funds many times in his shareholder letters. In 2013, he advised the trustee for his wife's assets to invest 90% of the funds in an S&P 500 index fund. In 2017, the "Oracle of Omaha" gave investors this advice: "When trillions of dollars are managed by Wall Street professionals charging high fees, it is usually the managers who reap huge profits, not the clients. Both large and small investors should stick with low-cost index funds."

Since the start of this year, Buffett has repeatedly sharply criticized the current stock market, arguing that it is increasingly dominated by short-term speculative trading rather than long-term value investing. At Berkshire Hathaway's shareholder meeting in May, he compared the stock market to "a church attached to a casino." Buffett has also consistently advised investors to avoid excessive leverage. "To risk what you have and need in order to obtain what you don't have and don't need strikes me as madness, even if doubling your net worth in the process would not make me happy," he said.