# Effective Leverage Effective Leverage measures how much exposure to the underlying token’s price movements a Leveraged Position represents at the current time. At Initialization / Rebalance: $$ \text{Target Leverage} = \text{Effective Leverage} = \frac{\text{Underlying Token Value}}{\text{Leveraged Vault Value}} $$ Afterwards (dynamic): $$ \text{Effective Leverage} = \frac{\text{Underlying Token Value}}{\text{Leveraged Position Value}} $$ This ratio adjusts over time as the price of the underlying token changes, showing how leverage drifts away from the initial setting until the next rebalance. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.mooncake.fi/concepts/leveraged-tokens-lt/effective-leverage.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.