2. What Is Price?

“Ideas that require people to reorganize their picture of the world provoke hostility.”

—James Gleick

The heart and soul of all trading is price. Whether you buy low and sell high or sell high and buy low, you can make money only because of the change in price. Exploiting change in price results from good strategy. Properly understood price is information. How stock and options traders view price affects their strategies.

Three types of price analysis are worth examination. First is how a stock trader relates to stock price. Next is how options traders view stock prices. Finally, we look at what information options prices communicate to an options trader.

How a Stock Trader Looks at Stock Price

Price is information. It is not ...

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