The Financial Post reports in its Tuesday edition that traders are betting on small-cap stocks despite their underperformance compared with larger stocks over the past year. A Bloomberg dispatch to the Post reports that the rising possibility of U.S. Federal Reserve interest-rate cuts is encouraging investors to view smaller listed companies more favourably, as they tend to benefit from lower rates. Additionally, a decline in the relative cost of upside options on the Russell 2000 index is making these bets more appealing. Susquehanna International's Christopher Jacobson says, "After getting hit in response to more hawkish rate cut expectations, the small caps have been a primary beneficiary of the more recent dovish tilt." The Russell 2000 has jumped 8.5 per cent in the five trading days through Friday, contributing more than 70 per cent to its advance this year. The total amount of outstanding call contracts on the iShares Russell 2000 ETF jumped to the highest level since September when compared with open interest in put options, signalling optimism that the rally is set to continue. With one month to go this year, the Russell 2000 is up 12 per cent in 2025, compared with a 16-per-cent gain in the S&P 500.