What Is Market Capitalization? Small Cap, Mid Cap, and Large Cap Explained
Understand market cap—the key metric for classifying company size and understanding risk profiles.
What is Market Capitalization?
Market Capitalization is the total market value of a company's outstanding shares. Calculated as: Stock Price × Total Shares Outstanding.
Market cap tells you how big a company is. Used to classify stocks as small cap, mid cap, or large cap.
TL;DR - Quick Answer
Market Cap = Stock Price × Shares Outstanding. Large cap ($10B+) = stable. Mid cap ($2-10B) = balanced. Small cap (under $2B) = higher risk/reward.
What Is Market Cap?
Market cap = Stock Price × Shares Outstanding. Apple at $185 with 15.5B shares = $2.9 trillion market cap.
Size Classifications
- Mega Cap ($200B+): Apple, Microsoft, Google
- Large Cap ($10B-$200B): Coca-Cola, Nike
- Mid Cap ($2B-$10B): Balanced risk/reward
- Small Cap (under $2B): Higher growth potential, more risk
Key Takeaways
- Market Cap = Price × Shares
- Larger = more stable, smaller = more volatile
- Options most liquid on large caps
Related Options Strategies
Understanding related strategies helps you choose the best approach for your market outlook and risk tolerance. Each strategy has unique characteristics that make it suitable for different market conditions.
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