OPEN INTEREST

SPOT PRICE : 0.00
LOT SIZE : 1
Open Interest(OI) is the total number of outstanding derivative contracts—such as options or futures—that have not been settled.

It represents the total number of positions that are currently open in the market. These positions could be held by buyers (longs), sellers (shorts), or both.

When new contracts are created (i.e., a new buyer and a new seller enter the market), open interest increases. When contracts are closed (positions are exited), open interest decreases.

Open Interest - Frequently Asked Questions

Open Interest can act as a confirming indicator for price movements.
  • If both price and open interest are rising, it often signals a strong bullish trend with new money supporting the rally.
  • If price is rising but open interest is falling, it may suggest short covering or a weakening trend.
  • If price and open interest are both falling, it could indicate trend exhaustion or profit-taking.
  • If price is falling while open interest rises, it may point to bearish sentiment gaining strength. By combining open interest with price and volume analysis, traders can better gauge the strength and sustainability of market moves.

    • While both metrics relate to market activity, they serve different purposes:
    • Volume measures the number of contracts traded during a specific time period (daily, hourly, etc.).
    • Open Interest measures the total number of active contracts that remain open at the end of that period.
    For example, if 1,000 contracts are traded in a day but all are opened and closed on the same day, the volume will be 1,000, but the open interest may remain unchanged if all contracts were settled.

    Open Interest helps traders understand:
    • Whether a market is active and liquid
    • If a current trend has strength or is likely to reverse
    • Whether new money is entering or leaving the market
    In general, increasing open interest along with a price trend confirms that the trend is strong. Conversely, falling open interest can indicate that a trend is losing momentum.

    An increase in open interest typically means that new contracts are being created as more traders enter the market. This can indicate:
    • A strengthening trend if prices are also moving strongly in one direction
    • Higher liquidity and more interest in the asset
    • Potential for increased volatility as participation rises
    It is often interpreted as a sign of market conviction and strong trader sentiment.

    A decline in open interest often means that existing contracts are being closed or exercised and not being replaced by new positions. This can suggest:
    • A weakening of a current price trend
    • Traders are exiting the market
    • Lower overall market participation
    Falling open interest during a price move may hint at an upcoming reversal or trend exhaustion.

    Open interest is valuable to a wide range of market participants:
    • Retail traders use it to gauge potential trends and volatility.
    • Institutional investors use it for hedging and tracking institutional flow.
    • Analysts use it alongside price and volume to confirm technical patterns.

    No, open interest can never be negative. It starts from zero and increases as new contracts are created. It only decreases when contracts are closed or settled. The minimum open interest is zero, and it reflects the number of existing open positions in the market.

    Not always. While high open interest often means better liquidity and stronger market participation, it can also:
    • Lead to increased volatility if market sentiment shifts
    • Suggest over-crowding in a trade, raising the risk of sharp reversals
    Traders should always evaluate open interest in context—with price action, trend direction, and volume.

    Open interest is typically updated by exchanges at the end of each trading day. However, modern trading platforms often provide real-time or near-real-time updates, especially in futures markets. This allows traders to track changes intraday and respond accordingly.
    © 2025 Stockestics   |   All Rights ReservedIllustrations by Freepik
    © 2025 Stockestics   |   All Rights Reserved
    Illustrations by Freepik