11.26What is open interest?
1What is it?
Open interest (OI) is the total number of outstanding (not yet closed) contracts for a strike or future.
2Why does it exist?
Rising OI shows new money entering. Traders read high call OI as possible resistance and high put OI as possible support (where sellers are concentrated).
3Diagram
| Price | OI | Common interpretation |
|---|---|---|
| ↑ | ↑ | Long build-up (bullish) |
| ↓ | ↑ | Short build-up (bearish) |
| ↑ | ↓ | Short covering |
| ↓ | ↓ | Long unwinding |
4Quick revision
- Outstanding contracts.
- Read with price change.
- Interpretations are not guarantees.
5Knowledge check
Q1. Price up, OI up?Show answer
Long build-up.
Q2. Price up, OI down?Show answer
Short covering.
Q3. Is OI the same as volume?Show answer
No. Volume counts trades; OI counts open contracts.