Quotes with Resistance & Support
Market Information

What is Open Interest?

This article was posted on Jun 11, 2008

Meaning

Open Interest also know as OI, is the total number of options and futures contracts that are not closed on a particular day. As you might be aware of volume in a particular stock in equity market, option trading involves the creation of a new option contract when a trade is placed. Open interest will tell you the total number of option contracts that are currently open.

Open Interest is mostly used to confirm a trend for a particular futures contract, For eg, lets look at Reliance 1000 May CALL, the open interest might tell us that there have been 5 options open in the month of May, a trader might then wonder does this refer to the number of contracts bought or sold.

Working
When a trader buy’s or sell’s an option, the transaction needs to be entered as either an opening or a closing transaction. If he buy’s 5 RELIANCE May 1000 CALL, he is buying the calls to ‘open’, i.e he is opening his position in a futures contract, which causes the Open interest to rise by 5, and then after sometime(within) the month he decides to sell his contract i.e close his position in a particular contract, then he is causing the open interest to go down by 5.

Open interest applies primarily to the futures market, it helps the measure the flow of money into the futures Market. For each seller of a futures contract (eg RELIANCE 1000 CALL) there must be a buyer of that contract. Thus a seller and a buyer combine to create only one contract.

A rise in open interest in a futures contract along with its price indicates bullishness, which means investors are creating long positions and vice versa.

The open interest position that is reported each day represents the increase or decrease in the number of contracts for that day, and it is shown as a positive or negative number.

Advantages of monitoring Open Interest
Changes in the Open Interst as mentioned earlier can help a trader interpret the future trend of a particular contract.

Open Interest RISING -> Indicates that the present trend (up, down, flat) will continue

Open Interest FALLING-> Indicates that the prest trend(up, down, flat) is likely to change or is coming to and end

Contract Price
Open Interest (%)
Future Trend(predicts)
Rising
Rising
The Contract is likely to trade strong in the coming days
Rising
Falling
The Contract is likely to see some downside in the coming days
Falling
Rising
The Contract should not be entered as of now
Falling
Falling
The Contract can be entered, as its likely to go up

21 Responses

{ ADD YOUR OWN }
Comment pages: 12Show all

  1. ZAINY Says:
    March 13th, 2011
    Posted at: 4:16 pm

    thanks gitanjali..ur link gave a clear understanding of OI


  2. Anurag Says:
    March 25th, 2011
    Posted at: 5:55 pm

    Hi Hari, can you pls explain your question....


  3. MUSHTAQ Says:
    April 14th, 2011
    Posted at: 8:51 pm

    @ gitanjali please help me tgo understand call/put .plz mail me at mushtaqbaba2002@gmail.com


  4. bharat Says:
    April 26th, 2011
    Posted at: 8:18 pm

    Hi ZAINY, can u pls give me any link to understand about open interest


  5. Muralidhar Says:
    April 28th, 2011
    Posted at: 9:05 pm

    Hi,Geetanjali, Pl.help me to understand call/put option and OI. Is there any sites to help understanding the trend chart on this. Pl. mail me at muralidhar.jallepalli@gmail.com


  6. PARESH Says:
    November 23rd, 2011
    Posted at: 1:06 pm

    Hey, The table of open interes in not correct [contract price, OI, Fut Price] just check it out GUYS!!!


  7. Balakumar Says:
    April 28th, 2012
    Posted at: 12:40 pm

    Hi CB

    Im bala from coimbatore, can u tell me where i can find the open interest for a stock in Futures only. [ i dont do options].
    I need to know the open interest in Pantaloon and Raymond for current month expiresy on 29 may 2012


  8. Gitanjali Says:
    April 30th, 2012
    Posted at: 11:59 pm

    Hi ZAINY, You are welcome ..sorry for the late response ..never been here recently ..[wonder what I'd done to be thanked !]Hi CB, Is it possible to get OI charts for commodities plz?


  9. NISHCHAL Says:
    June 6th, 2012
    Posted at: 12:50 pm

    SHOULD I SELL NIFTY ON 4950


  10. rajkumar Says:
    September 13th, 2012
    Posted at: 11:24 am

    nifty 1st target nearly achieved book partial profit near 5447 in spot and rest hold stoploss visit for positional calls
    http://rajkumarmarkettips.blogspot.in/


  11. bhavesh Says:
    November 17th, 2012
    Posted at: 6:28 pm

    Sir Pl.help me to understand OI. Is there any sites to help understanding about OI

    can u pls give me any link to understand about open interest


  12. Dinesh Says:
    March 14th, 2013
    Posted at: 11:54 am

    Sir,

    Can we buy or sell a share in pre open market and at the time of After maket orders


  13. Rakesh Says:
    December 18th, 2013
    Posted at: 6:59 am

    Is there any site that gives the trend chart of the Open Interests, please do let me know


  14. ashwani kumar Says:
    February 4th, 2015
    Posted at: 11:57 am

    is this option interest calculated per broker or per exchange or per client ?
    I have this confusiion because for every buy call there will be sell ,which makes net position 0.So how i will get any position .
    plz reply soon


  15. Deepali Says:
    March 24th, 2016
    Posted at: 10:40 am

    Hi open interest m and lk not understand

    For example. 3.5lk


  16. deepali Says:
    March 24th, 2016
    Posted at: 10:46 am

    I have confusion M and. Lk meaning. Of. Open intres

Comment pages:12Show all

  1. Your name>
    Change your image

    Note: rel="nofollow" in use - do not spam, do not advertise!

Interesting Posts:

Breakouts

+ve 30 DMA    50 DMA    150 DMA    200 DMA
-ve 30 DMA    50 DMA    150 DMA    200 DMA

Latest Query

Good morning sir. Hope all is well. Wish u a happy diwali. I bought inox wind @160 rs 200 stocks Prese...view more »
- by Rajeshkumar
Status: Replied view reply »

Market Stats

  • Nasdaq
    6605.07
    -19.00
    [-0.29%]
  • Nikkei 225
    21457.64
    +9.00
    [+0.04%]
  • Hang Seng
    28487.24
    +328.00
    [+1.17%]
  • Straits Times
    3340.03
    +5.00
    [+0.15%]
  • FTSE 100
    7533.79
    +10.00
    [+0.14%]
  • CAC 40
    5373.03
    +4.00
    [+0.09%]

Search Our Archives

Latest Investment Idea