What is Open Interest?
Open interest is a term used in the context of financial markets, particularly in futures and options trading. It refers to the total number of outstanding or open contracts for a particular financial instrument, such as futures contracts or options contracts, at the end of a trading day. Open interest is often used as an indicator of market activity and liquidity in derivatives markets. Higher open interest suggests greater market participation and interest in a particular financial instrument.
Geeky Takeaways:
- Open interest represents the total number of contracts that have been initiated and are still open or outstanding at the end of a trading session, particularly in futures and options trading.
- Changes in open interest can influence price movements in financial markets.
- Traders and analysts often use open interest data alongside price and volume data to analyze market trends.
Table of Content
- Open Interest Calculation
- Open Interest Interpretation
- Importance of Open Interest
- Real-World Example of Open Interest
- Higher or Loser Open Interest: Which is better?
- What happens when Open Interest Increases?
- Tips to Use Open Interest to Gauge Market Performance
- Is Open Interest Bearish or Bullish?
- Open Interest vs. Trading Volume
- Open Interest – FAQs