All thanks to interest rate cuts, and the potential for more this year.
In fact, history shows that rate cuts often give small caps a boost. Part of the reason for that is these companies often rely on debt, and will therefore benefit from lower borrowing costs. Plus, they’ll have easier access to capital, boosting potential profitability. Some argue that small caps are some of the strongest beneficiaries of rate cuts.
Seeing that we may get another two cuts this year, investors may want to jump into hot small cap stocks, or even jump into exchange traded funds (ETFs) such as:
Vanguard Small-Cap ETF (VB)
With an expense ratio of 0.05%, the Vanguard Small-Cap ETF tracks the performance of the CRSP US Small Cap Index. It also holds 1,336 stocks, some of which include SoFi Technologies, NRG Energy, Atmos Energy, Reddit Inc., and Pure Storage.
Even better, it pays a quarterly dividend. It just paid a dividend of just over 80 cents per share on October 1. Before that, it paid just over 78 cents a share on July 2. And before that, it paid out a dividend of just over 91 cents on March 31.
iShares Russell 2000 ETF (IWM)
With an expense ratio of 0.19%, the iShares Russell 2000 ETF tracks small cap US companies. It holds 1,965 stocks, including Credo Technology, Bloom Energy, IONQ Inc., Fabrinet, and Rambus Inc. And it pays a quarterly dividend.
Most recently, it paid a dividend of just over 67 cents on September 19. Before that, it paid out a dividend of just over 57 cents on June 20. And before that, it paid out a dividend of just over 45 cents on March 21.
In a short straddle, the trader believes the market will consolidate or move sideways into the options’ expirations. A short straddle entails the simultaneous sale of a call option and a put option of the same security, strike price, and expiration date. The short call option allows the trader to gain if it expires at-the-money, and the short put option allows to trader to gain if it also expires at-the-money; if the market either advances or declines, then the trader loses the amount by which the option is in-the-money. Since the trader is selling both a call and a put, the trader initially receives the full option premiums for both contracts, making this a credit straddle. Because he or she is taking on more risk by selling both options, the trader receives a larger premium. To obtain the break-even points of a short straddle, one would add the net payment received on the straddle to the short call option’s strike price and subtract the net payment received on the straddle from the short put option’s strike price – anything above the upper (call option’s) break-even point would be a loss and anything below the lower (put option’s) break-even point would be a loss. Any price in between these two levels would be a gain. The maximum gain for a short straddle is the initial premium income the trader receives for selling the options, while the maximum loss for a short straddle is unlimited.
The first profit opportunity we will review is a stock purchase in HAYW stock or Haywards Holdings Incorporated. Designing cleaning tools for the pools Haywards Holdings sells pump stations, filters, heating systems, lighting, and more.
On its monthly chart HAYW slumped through the first half of 2025. Bullish leaps in June led to the July 2025 ‘Buy Signal’ and the overall bullish trend since then as the trend continues to climb higher.
Looking at the HAYW daily chart shows an overall sideways pattern forming since its September 2025 trading. The stock awaits the next breakout in its trend.
We recommend buying HAYW stock at the current price level.
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