The day high refers to the highest price level at which a security has traded during a particular trading session. It represents the peak value reached by the security's price within the trading day.
Importance of day high
The day high is significant as it provides traders with valuable information about the price dynamics of security during the trading session. It serves as a reference point for assessing the strength of buying interest and the overall bullish sentiment in the market.
How to use day high in options trading?
In options trading, the day high can be used as a reference point for identifying potential entry or exit points for trades. Traders may look for opportunities to buy call options when the underlying security's price surpasses its day high, indicating bullish momentum. Conversely, traders may consider selling put options when the security's price falls below its day high, signalling potential bearishness. Additionally, monitoring the day high can help traders gauge the intraday volatility and adjust their trading strategies accordingly.
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