LU Price Band — Meaning, Type, limits and Best Example 2021

There are many stock market terms which also confuse many people. LU price band is one of them which is commonly used in the stock market. L/U Price band indicates the stock circuit.

It means maximum how much a stock can increase or decrease with a single trading date. Let’s understand the LU price band in detail with examples.

LU Price Band

L/U Price Band stands for Lower / Upper Price Band of a stock in the stock market, which refers to the Lower Circuit and Upper Circuit limit of a stock.

The price of a stock cannot surpass the upper circuit on the upward or the lower circuit on the downward due to the positioning of the circuits within a single trading day.

Example

On June 9, the stock was trading at 3241.7 per share.

3179.80 was the previous closing price. This is a crucial quantity because the lower and upper circuit price bands are determined by the previous day’s closing price.

Every stock has a separate price band limitation, which is commonly five percent, ten percent, fifteen percent, and twenty percent.

LU Price band calculation

Dmart L/U Price Band is 20 percent.

635.95 is 20% of the previous closing price of 3179.80

As a result, the price of the upper circuit will be 3179.80 + 635.95 = 3815.75.

In the figure above, the U or Upper Circuit is stated as 3815.76 in the L/U Price Band.

In the same way, the lower circuit price is 3197.80–635.95 = 2543.85

That number is also mentioned in the graphic above.

On this day, the value of Dmart cannot fall below 2561.84 or rise above 3815.75

Originally published at https://profitmust.com on June 9, 2021.