Price Band

There are no tuba players here. No drums. No oboes. Just a range or a band in which the shares of GE are trading. They’re a trading sardine, in fact. Buy them at 9 bucks, sell them at 11 bucks, and make a 2 dollar spread for a while as things are trading in that price band.

The band applies not just to stock, but to more commonly sold items. Life insurance for a healthy 30-year-old will trade in a band of about 60 bucks a month for a million dollar policy. Price bands matter to traders, and those who set derivatives prices—i.e. if the band is narrow, the volatility is low, so options on that security anywhere meaningful outside of its trading range will be cheap. But not as cheap as the oboe player’s spit cup.