Standard & Poor's 500 Index S&P 500
The S&P 500 is a stock market index tracking 500 of the largest publicly traded companies in the US. It is widely considered the best benchmark for the overall US stock market.
Key Facts
- • Launched in 1957 by Standard & Poor's
- • Companies are selected by committee based on market size, liquidity, and sector
- • Weighted by market capitalization, so larger companies have more impact on the index
- • Average annual return has been roughly 10% historically before inflation
Related Trading Concepts
Market Cap
Market Capitalization: the total value of a company's outstanding shares, calculated as stock price multiplied by number of shares outstanding. It classifies companies into small-cap, mid-cap, and large-cap categories.
P/E Ratio
Price-to-Earnings Ratio: a number that shows how much investors are willing to pay per dollar of a company's earnings. It helps you compare whether a stock is expensive or cheap relative to its profits.
Learn More With Our Guides
Analyze With These Tools
Position Size Calculator →
Calculate optimal position size for S&P 500 constituent stocks based on your risk tolerance and stop loss level.
Why use this: After screening S&P 500 stocks, the next step is sizing your position to manage risk.
Options Profit Calculator →
Model long call and long put positions on S&P 500 options at expiration.
Why use this: SPY, which tracks the S&P 500, is the most liquid options underlying in the world.
Risk/Reward Calculator →
Evaluate the risk/reward ratio of potential trades on S&P 500 index components.
Verify that potential trades offer favorable risk-adjusted returns before entry.