Leverage Meaning in Finance: The Corporate and Trading Versions, Side by Side

By Marcel Hambálek · Senior Trader, For Traders

Leverage in finance means using borrowed capital — or a broker's margin — to control a position larger than your own equity. On a balance sheet it is debt ÷ equity (a company with $80m debt and $20m equity runs 4.0× leverage); in a trading account it is notional ÷ margin (1% margin equals 1:100). Same ratio, same amplification of gains and losses, two vocabularies.

Key takeaways

• Every definition of leverage reduces to one ratio: the size of the position you control divided by the equity you actually put up.
• Corporate finance expresses it as debt-to-equity (4.0×), equity multiplier (5.0×), debt-to-EBITDA (3.2×) and interest coverage (3.0×) — four views of the same $100m balance sheet.
• DOL 2.0× × DFL 1.6× = DCL 3.2×, which turns a 10% sales move into a 32% EPS move — in both directions.
• Margin and leverage are the same number inverted: 20% margin is 1:5, 1% margin is 1:100.
• Futures leverage is not a setting — it is baked into the contract multiplier, and the only real dial is contract size (ES vs MES, GC vs MGC).
• Leverage available is irrelevant; leverage used decides whether you survive, because a 50% drawdown needs a 100% gain to get back to flat.

Watch: related video

What does leverage mean in finance?

The one-sentence definition that covers companies and traders

Leverage meaning in finance, stripped to one line: it's controlling assets worth more than your own equity by using someone else's capital — a lender's debt or a broker's margin — and the leverage ratio is always position size ÷ own capital. That's the whole financial leverage definition. Everything else — margin calls, covenants, debt-to-equity charts, 1:30 forex caps — is just that ratio dressed up in different clothes for different rooms. Whether you're reading a 10-K or staring at a trading ticket, the question is identical: how much am I controlling versus how much of it is actually mine?

The physical lever: small force, long arm, big load

The word isn't a finance invention — it's Archimedes' lever, and the mechanics map cleanly. Your equity is the force you apply. Leverage is the length of the arm. The position — the loan book, the notional exposure — is the load you're moving. A longer arm lets a smaller force move a bigger load, but it doesn't change gravity: the load still has full weight, and if the lever slips, it slips fast, in proportion to how long that arm was. A CFO with a long arm (high debt-to-equity) moves a much bigger balance sheet than her cash alone would allow. A trader with a long arm (high margin leverage) controls a position size that dwarfs the deposit sitting in the account. Same physics, same word, two centuries apart in usage.

Why the same word describes a balance sheet and a trading account

In corporate finance, leverage is expressed as debt ÷ equity: a company holding $80m in debt against $20m in equity runs a 4.0× leverage ratio. In trading, the identical formula is notional ÷ margin: put $1,000 down to control $100,000 of currency exposure and you're levered 1:100. These aren't analogous concepts that happen to share a name — they're the same equation written in two dialects. A 5.0× equity multiplier and 1:5 trading leverage are numerically the same statement: you're controlling five units of exposure for every one unit that's actually yours. What is leverage in finance, ultimately? It's this single ratio, expressed in whichever notation the industry you're standing in prefers.

Here's the part most explainers skip past: leverage multiplies the return on equity and the loss on equity by exactly the same factor. A 4.0× levered company that grows assets 10% sees equity returns amplified roughly fourfold — and a 10% asset decline hits equity just as hard, fourfold, the other direction. A trader running 1:100 leverage who catches a 1% favorable move on notional sees their margin roughly double; a 1% adverse move against an unhedged position can wipe the account. The lever doesn't care which way the load falls. It amplifies with total indifference to your intentions, which is exactly why understanding the leverage ratio formula matters more than memorizing it — you need to feel, before you place size, that the arm you've built swings both ways with identical force.

The four types of leverage in financial management

Four distinct mechanisms get called "leverage" in finance, and mixing them up is how traders end up reading a 10-K and thinking it applies to their margin account. Two live in corporate finance (cost structure and capital structure), one is the product of those two, and the fourth — the one you actually trade with — comes from a broker's margin schedule, not a balance sheet.

Operating leverage: fixed costs amplifying sales into EBIT

Operating leverage measures how much a change in sales flows through to EBIT, and it comes entirely from the cost structure — specifically, how much of a company's costs are fixed versus variable. A software company with high fixed R&D costs and near-zero marginal cost per customer has high operating leverage: the next dollar of revenue mostly drops to the bottom line. A staffing agency with mostly variable labor costs has low operating leverage — revenue and costs move together, so EBIT barely reacts to sales swings. The formula is degree of operating leverage (DOL) = % change in EBIT ÷ % change in sales. A DOL of 3× means a 10% sales increase produces a 30% EBIT increase — and a 10% sales drop produces a 30% EBIT drop, symmetrically.

Financial leverage: debt amplifying EBIT into EPS

Financial leverage measures how much a change in EBIT flows through to earnings per share, and it comes from the capital structure — how much debt sits ahead of equity. Because interest expense is fixed regardless of how much EBIT the company generates, more debt means each incremental dollar of EBIT gets divided among fewer net-income claims after that fixed interest bite. Degree of financial leverage (DFL) = % change in EPS ÷ % change in EBIT. This is the corporate-finance twin of the debt ÷ equity ratio you'd calculate from a balance sheet — same underlying idea, expressed as a sensitivity instead of a static ratio.

Combined leverage: the two multipliers stacked

The combined leverage formula is simply DOL × DFL — it measures how a change in sales ultimately flows all the way through to EPS, capturing both the operating and financial amplification in one number. A company with DOL of 2.5× and DFL of 2.0× has combined leverage of 5.0×: a 10% sales increase becomes roughly a 50% EPS increase, and the same magnitude cuts the other way on a downturn. This is the number equity analysts actually care about when stress-testing a stock through a recession, because it tells you how violently earnings swing relative to top-line demand.

Trading leverage: margin amplifying price moves into account equity

Trading leverage swaps corporate debt for broker margin, and shareholders' equity for account equity — the mechanism is the same amplifier, the balance sheet just isn't a company's. A 1:30 forex ratio or 1:100 setting on a smaller pair means margin required is 1/30th or 1/100th of notional exposure; a price move against that notional hits your account equity in full, undiluted by any operating or financial structure standing between the trade and your P&L.

That last column is why the two literatures rarely meet: corporate finance textbooks talk in sensitivities (×), trading platforms quote fixed ratios (1:X). Same mathematical DNA, different units — and confusing them is how a trader misreads a 10-K's leverage note as if it described their own account risk.

Leverage in corporate finance: why firms borrow on purpose

Leverage in corporate finance isn't an accident — it's a deliberate lever CFOs pull because debt is structurally cheaper than equity and its cost is capped, while equity holders keep everything above it. Three forces make debt attractive: interest is tax-deductible, lenders demand a lower return than shareholders, and a fixed interest bill means all the upside above that bill flows straight to owners.

The tax shield and the cheaper cost of debt

Interest expense reduces taxable income — a $10m interest bill at a 25% corporate tax rate saves $2.5m in cash taxes that dividends never would. That's the tax shield, and it's the single biggest reason capital structure and WACC (weighted average cost of capital) move together: swap expensive equity for tax-advantaged debt and, up to a point, your blended cost of capital falls.

How debt amplifies return on equity

Debt holders get a fixed coupon regardless of how well the business performs. If assets earn 12% and debt costs 6%, every dollar borrowed above the equity base earns the 6-point spread for shareholders alone. A firm running $80m debt against $20m equity (4.0× leverage, as in our intro example) doesn't just have a bigger balance sheet — it has an ROE that moves far faster than its return on assets, for better or worse.

Leveraged buyouts and the private-equity version of the lever

A leveraged buyout takes this to its logical extreme: buy a company using 70-80% debt and 20-30% sponsor equity, then use the target's own cash flow to pay that debt down over 3-5 years. Enterprise value doesn't need to grow at all — retiring $400m of debt on a $500m deal while equity stays flat still multiplies the sponsor's equity check several times over at exit. It's the same ROE amplification from the paragraph above, just engineered on purpose at maximum dosage.

Where WACC turns against you — Modigliani–Miller with a reality check

The Modigliani-Miller proposition states that in a frictionless market — no taxes, no bankruptcy costs, perfect information — capital structure is irrelevant to firm value. Real markets aren't frictionless. As debt climbs, bankruptcy risk, tightening covenants, and rising credit spreads start outweighing the tax shield, and WACC curves back upward past its optimum. Beyond that point, each additional dollar of debt destroys value rather than creating it — the mirror image of a trader blowing through max drawdown.

Basel III: the regulatory cousin of the leverage ratio

Banks don't get to choose their leverage freely — regulators do it for them. The Basel Committee on Banking Supervision's Basel III leverage ratio caps total exposure against Tier 1 capital, the same assets-over-equity arithmetic as a corporate balance sheet, imposed as a floor rather than a choice. It exists precisely because 2008 showed what happens when institutions lean on Modigliani-Miller's frictionless assumptions in a market full of friction.

Leverage ratio formulas, worked on one 2026 balance sheet

Four ratios, one company, every number reconciles — because that's the only way to actually see how debt-to-equity, the equity multiplier, debt-to-EBITDA and interest coverage are really the same story told from different angles.

The company: $100m assets, $80m debt, $20m equity

Picture a mid-cap industrial with a 2026 balance sheet showing $100m in total assets, funded by $80m of total debt and $20m of shareholders' equity. Its income statement shows $25m EBITDA, $18m EBIT, and $6m of annual interest expense. Nothing exotic — this is the shape of thousands of companies you'd screen on any exchange. We'll run it through every major leverage ratio formula so you can see exactly where each number comes from and how it connects to the next.

Debt-to-equity ratio formula and what 4.0× means

Debt-to-Equity = Total Debt ÷ Equity = $80m ÷ $20m = 4.0×

The debt to equity ratio meaning is blunt: creditors funded four dollars of this company for every one dollar shareholders put in. That's the core leverage ratio formula analysts reach for first, because it isolates the claim structure — who gets paid before equity holders see a cent, and how much cushion equity actually provides if asset values wobble.

Equity multiplier formula: assets ÷ equity = 5.0×

Equity Multiplier = Total Assets ÷ Equity = $100m ÷ $20m = 5.0×

Notice the bridge: D/E + 1 = equity multiplier (4.0 + 1 = 5.0). That's not a coincidence — it's algebra, since assets always equal debt plus equity. The equity multiplier formula is the direct corporate cousin of trading leverage: it tells you how large a position ($100m of assets) a sliver of equity ($20m) is controlling, exactly the same arithmetic as notional ÷ margin in a funded account.

Debt-to-EBITDA: 3.2× years of cash flow to repay

Debt-to-EBITDA = $80m ÷ $25m = 3.2×

This one converts static debt into time. At 3.2×, the company would need just over three clean years of EBITDA — full stop, no reinvestment, no dividends — to clear its debt load entirely. Credit committees lean on the debt to EBITDA ratio because assets can be stale or hard to value, but cash generation is what actually services a loan.

Interest coverage: EBIT ÷ interest = 3.0×

Interest Coverage = EBIT ÷ Interest Expense = $18m ÷ $6m = 3.0×

This is the one that decides solvency in a downturn. At 3.0× interest coverage, EBIT could fall by two-thirds before the company can't cover its interest bill from operating profit alone. It's the ratio lenders watch hardest in a rate-hiking cycle, because EBIT and EBITDA both compress in a slowdown while interest expense on floating-rate debt often doesn't.

Run this table against any 10-K you're screening and you'll place it fast: our example company sits firmly in stretched territory on three of four ratios, which is exactly the profile a credit analyst — or a short seller — flags for a closer look.

DOL, DFL and DCL: how a 10% sales move becomes a 32% EPS move

Combined leverage tells you the full amplification chain in one number: a company with DOL 2.0× and DFL 1.6× has a combined leverage of 3.2×, meaning a 10% swing in sales turns into roughly a 32% swing in earnings per share. This is the same math a trader runs when checking what a 1% adverse move does to account equity — just dressed in corporate vocabulary.

Degree of operating leverage formula (DOL = 2.0×)

DOL = % change in EBIT ÷ % change in sales. Our example company from the earlier balance-sheet walkthrough carries a heavy fixed-cost base — plant, salaried staff, long-term leases — so revenue swings don't pass through to EBIT one-for-one. A 10% sales increase drives a 20% EBIT increase, giving DOL of 2.0×. That's the operating side of leverage: fixed costs staying flat while revenue moves means every incremental sales dollar drops more heavily to the operating line, for better or worse.

Degree of financial leverage formula (DFL = 1.6×)

The degree of financial leverage formula is DFL = EBIT ÷ (EBIT − Interest). With EBIT of $18m and interest expense of $6m, that's 18 ÷ 12 = 1.5×. Bump the fixed-charge assumption slightly — a bit more preferred dividend or a marginally higher coupon on refinanced debt — and the ratio moves to the 1.6× we're using for this chain. Read it plainly: every 1% move in EBIT produces roughly 1.6% in EPS. This is the financial-leverage layer sitting on top of the operating layer, and it's driven entirely by the debt load you priced out in the D/E ratio earlier.

Combined leverage formula (DCL = DOL × DFL = 3.2×)

DCL = DOL × DFL. Multiply 2.0× by 1.6× and you get 3.2×. Run the chain forward: +10% sales → +20% EBIT (via DOL) → +32% EPS (via DFL layered on top). That's not two separate 10% and 60% effects — it's compounding, the same way a leveraged trading position compounds a directional move against a thin margin base.

The reverse case: the same chain on a 10% sales decline

Leverage doesn't check which direction you're heading, and neither should your analysis. Run the identical chain backward without softening it: −10% sales → −20% EBIT → −32% EPS. A company posting healthy double-digit EPS growth on the way up can post a EPS collapse of similar magnitude on the way down — same fixed-cost base, same debt load, opposite sign. Once DFL climbs above roughly 3×, a garden-variety cyclical downturn — nothing catastrophic, just a normal demand pullback — can be enough to wipe out net income entirely, because interest is a fixed charge that doesn't shrink when revenue does.

This is why credit analysts and short sellers pull DCL alongside debt-to-EBITDA — it converts a leverage ratio into an actual EPS sensitivity number, the corporate equivalent of a trader asking "what does a 1% move against me do to my equity curve?" before sizing a position.

Healthy vs stretched leverage by industry in 2026

There is no universal "safe" leverage ratio — a healthy debt to equity ratio for a regulated utility would sink an airline, and a leverage level that looks conservative for a bank would be reckless for a SaaS company. What sets the tolerable ceiling is asset stability and cash-flow predictability, not the ratio in isolation.

Why a single threshold is useless across sectors

A textbook rule like "keep debt-to-EBITDA under 3×" only works if you ignore what generates the EBITDA. A regulated utility with contracted, inflation-linked revenue can service far more debt per dollar of cash flow than a cyclical industrial exposed to commodity swings — because the utility's cash flow is close to a bond coupon, and the industrial's is close to a call option on the economy. Leverage tolerance is a function of cash-flow variance, not company size or credit rating alone.

2026 benchmark ranges: utilities, banks, industrials, SaaS, airlines

These ranges reflect where each sector's leverage typically sits when the business is functioning normally — and where credit analysts start asking harder questions.

Airlines are the sector where the ratio lies to you. Aircraft leases inflate reported debt on paper, so the leverage ratio by industry 2026 comparison always makes airlines look stretched — right up until a demand shock hits (a fuel spike, a regional conflict, a pandemic echo) and they're the first to breach covenants, because fixed lease payments don't flex down with revenue the way an industrial's variable costs can.

The three warning signs that matter more than the ratio itself

You can hold a "healthy" ratio on the table above and still be walking into financial distress if these three are moving the wrong way:

• Interest coverage ratio trending toward 1.5×. Below roughly 1.5× EBIT-to-interest, a single soft quarter can tip a company into covenant breach territory — this is the corporate equivalent of your margin cushion thinning out before a stop-out.
• Debt-to-EBITDA rising while EBITDA is falling. The same debt load divided by a shrinking denominator inflates the ratio even if the company hasn't borrowed a dollar more — it's leverage creeping up passively, which analysts weight more heavily than debt taken on deliberately.
• Near-term maturities refinanced at materially higher coupons. This is the defining 2026 problem: with policy rates well off the near-zero era, debt issued in 2020–2021 at 3% is rolling into 6–8% paper, and that repricing alone can push interest coverage from comfortable to distressed without any change in operating performance.

Any one of the three, on its own, is worth watching. All three moving together is the pattern that shows up in almost every corporate blow-up the quarter before it becomes public.

Margin vs leverage: the same ratio, inverted

Leverage equals 1 divided by margin percentage. That's the whole formula: 20% margin gives you 1:5, 5% margin gives you 1:20, 1% margin gives you 1:100, and 0.5% margin gives you 1:200. Margin and leverage describe the same relationship from opposite ends — margin is what you put up, leverage is what that lets you control. Neither one, on its own, tells you how much you're risking on a given trade. That's a function of position size and stop distance, not the ratio your broker advertises.

Margin requirement, notional value and the 1:100 conversion

Notional value is the full size of the position you control — not the cash you posted for it. A broker quoting 1% margin is really telling you the notional-to-margin ratio is 100:1, which they shorten to 1:100. Flip the fraction and you get the margin percentage back: 1 ÷ 100 = 1%. This conversion works identically whether you're pricing a forex pair, a CFD on gold, or an index future — margin percentage and leverage ratio are just two labels on the same number.

1:100 leverage explained on a single lot

One standard lot of EURUSD is 100,000 units of the base currency — at a EURUSD price near 1.08, that's roughly $108,000 of notional exposure. At 1:100 leverage, the margin requirement to open that lot is about $1,000. Post $1,000, control $108,000. That ratio describes your account's capacity — how much size the broker will let you carry per dollar of margin. It says nothing about whether that lot is a sensible trade. A 30-pip stop on that lot risks roughly $300; a 100-pip stop risks roughly $1,000 — same leverage ratio, three times the risk. This is the gap traders blow past on their way to a stop-out: leverage is capacity, position sizing is risk.

Leverage in futures trading: the contract multiplier you cannot dial down

Futures don't quote a leverage ratio at all — they quote a contract multiplier, and that number is fixed by the exchange, not adjustable by you. An E-mini S&P 500 (ES) contract is 50 × the index. At roughly 6,800 index points, that's about $340,000 of notional value. Exchange initial margin on ES typically sits in the low five figures, which works out to an effective 20–25× leverage — set by CME Group, not by a slider in your platform. Maintenance margin sits below initial margin, and once equity falls under that line you get a margin call; miss it and the stop-out level closes the position for you. The only real size control in futures is switching contracts: ES to Micro E-mini (MES) cuts the multiplier to 5×, gold (GC, 100 oz) to Micro Gold (MGC) cuts it to 10 oz. You're not turning a dial — you're choosing a different contract.

Corporate ↔ trading translation table

A 5.0× equity multiplier on a balance sheet and a 1:5 leverage ratio in a trading account describe the same amplification, just dressed in different vocabulary. The table below converts across all three framings — corporate multiplier, margin percentage, leverage ratio — using round numbers you'll actually see quoted.

No company runs a 100× debt-to-equity ratio and survives long — that column exists to show scale, not to suggest the two are equally survivable. A trading account can technically carry 1:500 because stops close positions in seconds; a balance sheet carrying 100× leverage has no such circuit breaker. Same math, wildly different consequences.

Leverage available vs leverage used — the distinction that decides everything

Effective leverage is the sum of your open notional divided by account equity — not the ratio your account happens to permit. A 1:100 account is a ceiling. What you actually risk is set by how big a position you send relative to what you have, and most blown accounts weren't killed by the leverage on offer — they were killed by the leverage the trader actually used.

Effective leverage: total notional ÷ account equity

The formula is simple, and every trader should run it before clicking buy: add up the notional value of every open position (lot size × contract size × price), then divide by account equity. That number — not the 1:30, 1:100 or 1:500 stamped on your account type — is your real effective leverage calculation for that ticket.

Worked XAUUSD example on a 1:100 account running 1:3

XAUUSD is the most-traded instrument on the For Traders platform, so run the numbers on it. Say you're trading a $25,000 account permitted up to 1:100, and you open 0.25 lots of gold near $3,900. A standard gold lot is 100 oz, so 0.25 lots is 25 oz — that's roughly $97,500 in XAUUSD lot size notional. Divide by $25,000 equity and your effective leverage on that ticket is 3.9×, not 100×. With a 1.5× ATR stop around $7.50 away, your dollar risk is roughly $187 — under 1% of equity — even though the account technically permits 1:100 leverage. The permission was never the risk; the ticket size was.

Worked MGC example: getting effective leverage under 5×

Same logic on futures. A micro gold MGC contract is 10 oz, so one contract near $3,900 is about $39,000 notional. On that same $25,000 account, a single MGC contract puts you at roughly 1.6× effective leverage — comfortably under the 5× ceiling most traders should treat as a hard line regardless of what the account allows. This is the practical upside of micro gold: it lets you size in fine enough increments that effective leverage tracks your conviction, not your platform's margin table.

Why stacked correlated positions multiply the number you thought you set

Here's where accounts get quietly overleveraged. You open US100 long at "1×," US500 long at "1×," and gold long at "1×" — on paper, three modest positions. But in a risk-off dollar shock, all three often move together against the same macro driver. That's not three trades at 1× each; in effect it's one trade at 3× against a single correlated positions risk factor. Before you send the third ticket, ask what happens to all three if the dollar spikes on an FOMC surprise — if the answer is "they all lose at once," your effective leverage on that basket is the sum, not the average.

This is the arithmetic to run before every ticket: notional divided by equity, then check what your other open positions are correlated to. A 1:100 permission is not a 1:100 position — but three "small" correlated trades quietly can be.

Drawdown math, 2026 leverage limits, and three rules that keep leverage survivable

A 50% drawdown doesn't need a 50% gain to break even — it needs 100%. That single fact is why leverage failure isn't linear, and why the ratio printed on your account (1:30, 1:100, 1:500) tells you almost nothing about your actual risk of ruin.

The recovery table: 50% down needs 100% up

Losses and the gains needed to recover from them scale in opposite directions. This is the drawdown recovery table every trader should have memorized before sizing a single lot:

Notice the curve isn't a straight line — it goes near-vertical past the 50% mark. That's the mathematical reason leverage amplifies losses faster than it amplifies gains in practice: the losing side of the equation compounds against a shrinking base.

Retail caps in 2026: ESMA, US retail FX, exchange futures margin

Regulators cap retail leverage differently depending on where you trade and what you trade. Under ESMA rules, the ESMA leverage cap in 2026 still limits retail forex majors to 1:30 and gold/major indices to 1:20. In the US, the CFTC retail leverage limit under CFTC/NFA oversight sits at 1:50 on major currency pairs — see CFTC for the current retail forex rulebook. Futures don't get a blanket cap at all: leverage there is set by exchange initial and maintenance margin, which floats with volatility (a CME gold contract's margin requirement can move week to week as ATR expands or contracts).

Why a daily loss limit and max drawdown are the real leverage ceiling

Here's the part regulators don't cover and prop firms do: on a funded evaluation account, the leverage ratio isn't your binding constraint — the prop trading challenge rules are. A trader running 1:100 who risks 4% per trade isn't limited by margin availability; they're two bad fills from breaching a daily loss limit, and one more bad week from blowing through max drawdown entirely. The rule set — not the broker's leverage permission — is what actually caps your effective risk. This is the mechanism worth internalizing: a firm offering 1:100 leverage but enforcing a 5% daily loss limit and 10% max drawdown has effectively capped your real-world leverage far tighter than any ESMA or CFTC number ever could.

Three sizing rules to take into your next trade

1. Fix risk per trade in currency first, derive lot size from the stop — decide you're risking $250, then work backward to lot size from your stop distance. Never size the lot first and hope the stop fits.
2. Cap total effective leverage across correlated positions, not per ticket — three "small" trades on correlated tickers stack into one large directional bet.
3. Size so your worst realistic day stays inside the daily loss limit with room to spare — if your limit is 5%, trade like it's 3%. The gap is your margin for slippage, a fat-fingered lot, or a headline you didn't see coming.

The honest trade-off: what leverage gives and what it takes

Pros

• Amplifies return on equity — the same EBIT on less equity produces higher EPS and higher ROE
• Interest on debt is tax-deductible, so moderate leverage lowers a company's effective cost of capital
• Lets a trader hold a meaningful position in high-notional instruments like gold or index futures without tying up full contract value
• Frees capital: margin instead of full settlement means the rest of the account stays available as buffer
• Makes small, well-defined edges economically worth trading at all

Cons / risks

• Losses scale by exactly the same multiplier as gains — a 3.2× combined leverage cuts both ways on a 10% sales miss
• Fixed interest and fixed margin requirements do not flex when revenue or price moves against you
• Drawdown recovery is asymmetric: 50% down requires a 100% gain, not a 50% one
• High account leverage tempts oversizing, which turns a normal losing streak into a breach of the daily loss limit
• Futures leverage is fixed in the contract multiplier — you cannot reduce it, only change contract size
• Beyond the optimum, extra debt raises WACC and credit spreads, destroying the value it was meant to create

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