What is Open Interest?
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
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Contract Price
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Open Interest (%)
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Future Trend(predicts)
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Rising
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Rising
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The Contract is likely to trade strong in the coming days
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Rising
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Falling
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The Contract is likely to see some downside in the coming days
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Falling
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Rising
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The Contract should not be entered as of now
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Falling
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Falling
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The Contract can be entered, as its likely to go up
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Anurag Says:
March 25th, 2011
Posted at: 5:55 pm
Hi Hari, can you pls explain your question....
MUSHTAQ Says:
April 14th, 2011
Posted at: 8:51 pm
@ gitanjali please help me tgo understand call/put .plz mail me at [email protected]
bharat Says:
April 26th, 2011
Posted at: 8:18 pm
Hi ZAINY, can u pls give me any link to understand about open interest
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 [email protected]
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!!!
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
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?
NISHCHAL Says:
June 6th, 2012
Posted at: 12:50 pm
SHOULD I SELL NIFTY ON 4950
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/
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
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
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
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
Deepali Says:
March 24th, 2016
Posted at: 10:40 am
Hi open interest m and lk not understand
For example. 3.5lk
deepali Says:
March 24th, 2016
Posted at: 10:46 am
I have confusion M and. Lk meaning. Of. Open intres