The presidential commission studying the October stock market collapse is considering limits on how much stock prices could move up or down in a day, sources said yesterday.

The five-man commission, led by investment banker Nicholas F. Brady, is expected to move next week from gathering information to forming conclusions about the causes of the market collapse and about possible remedies. Among the critical issues the commission will address are ways to limit the tremendous volatility in stock prices that climaxed in the 508-point plunge in the Dow Jones industrial average on Oct. 19.

One way to limit daily price swings would be to adopt a method used on the Tokyo Stock Exchange and set maximum daily limits on stock price movements.

Putting limits on stock price swings would have a profound impact on the market, however. The mere existence of the limits, along with the trading halts they could cause, would affect investment decisions made by professional speculators, individual investors and other market participants.

Price limits, widely used in the U.S. futures markets, were imposed by the Chicago Mercantile Exchange on stock index futures contracts following the October market collapse. Stock index futures give investors the opportunity to bet on the movement of broad stock market averages such as the Standard & Poor's 500 average, which underlies a contract traded on the Chicago Mercantile Exchange.

Chicago Mercantile officials responded to criticism that volatile stock index futures trading distorted stock prices in October by imposing temporary daily price limits.

These officials have told the Brady Commission, however, that if price limits on stock index futures contracts become permanent, similar limits ought to be imposed on individual stocks traded on the New York Stock Exchange and other markets.

Under such a system, if a stock selling for $50 a share had a 20 percent limit -- $10 -- it could drop no further in a day once it hit $40 a share and could rise no further once it hit $60 a share. Unless the price reversed direction, trading would be halted when it hit the limit.

One member of the Brady panel, Capital Guardian Trust Co. Chairman Robert Kirby, said yesterday he agreed that if any price limits are imposed they ought to apply to stocks as well as stock index futures.

Nicholas Brady, chairman of the presidential commission, said the idea that any system of limits should apply to both stocks and stock index futures sounded "reasonable," but he said he had not made up his mind on the issue of limits.

Kirby, a Los Angeles-based money manager, said that imposing limits on daily stock price movements could lead to halts in trading that he characterized as "structured discontinuity."

The random halts in trading of many stocks last October, caused by imbalances in buy and sell orders, were chaotic and might have been avoided if daily price limits were in place, Kirby said.

Securities and Exchange Commission member Joseph Grundfest said arguments against imposing daily limits on stock price movements include the "gravitational effect," the theory that once stocks are close to the daily limit they will keep moving until they hit it. The reason, Grundfest explained, is that investors would sell as the price nears the limit so they aren't stuck when trading is halted.

"If they tell you they are going to shut the grocery store in half an hour, your incentive to go shopping increases," Grundfest said, adding that he has not yet made up his mind on the issue.

Grundfest said other arguments against daily limits include that they could drive trading offshore to foreign markets; prevent U.S. markets from immediately reflecting real expectations and real declines or increases in values; and cause people who wish to sell to get locked into positions if stocks cease to trade once limits are reached.

Although there are pitfalls, daily price limits may bolster investor confidence by providing a floor for prices on a given day. Price limits also could attract buyers to a stock when selling pressure is heavy by sending a signal that the price has fallen to the limit.

"You could say that after a stock goes down 10 percent {for example} we close trading for an hour or maybe the rest of the day or whatever it may be," Kirby said. "I don't think that threatens the system."

Yutaka Nakai, executive vice president of Daiwa Securities, a major Japanese company, said that one of the implications of daily limits on stock price movements is that pressure on prices plays out over many more days. That can, for example, prolong negative investor sentiment. On the Tokyo Stock Exchange, price limits are set on the basis of numerous stock price categories, Nakai said, structured so that the maximum price movement up or down is 20 percent.

Once a stock falls its limit, it may cease trading. However, it is possible that investor sentiment will turn after a stock has dropped the limit and the stock may begin to trade at higher prices, another Daiwa official said.

Nakai pointed out that there are numerous differences in investors in the U.S. and Japanese stock markets and that while price limits work well in Japan, he is unsure whether they would help in the United States.

New York Stock Exchange officials declined to comment on the idea.

The Brady Commission heard testimony this week from Securities and Exchange Commission Chairman David Ruder, Federal Reserve Board Chairman Alan Greenspan and Nicholas deB. Katzenbach, the former IBM general counsel who is doing a study of the stock market collapse for the NYSE. The commission plans to submit its report to President Reagan by Jan. 4.