Small-Cap Stock
High-growth, high-risk market underdogs
Definition
Small-cap stocks are shares of companies with a market capitalization typically between $300 million and $2 billion. Small-caps offer higher growth potential but come with greater volatility and risk compared to large-cap stocks. They are less covered by analysts, less liquid, and more sensitive to economic downturns. The Russell 2000 index tracks small-cap U.S. stocks.
Example
A regional bank with a $500 million market cap is a small-cap stock. It may have strong growth prospects in its local market but lacks the financial resources, brand recognition, or analyst coverage of major banks like JPMorgan. During market downturns, small-caps often fall more sharply than the S&P 500.
Related Terms
Frequently Asked Question
What is a small-cap stock?
A small-cap stock is a company with a market cap between $300M and $2B. Small-caps can deliver high growth but are more volatile, less liquid, and riskier than large-cap stocks.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.