Open Interest (OI) measures market participation and liquidity in derivatives. It counts the total number of open (unresolved) contracts at any point in time.
OI vs Volume
- Volume: Number of contracts traded in a session (resets to 0 daily)
- Open Interest: Cumulative outstanding contracts (carries forward)
Interpreting OI
| Price | Open Interest | Interpretation |
|---|---|---|
| Rising | Rising | Strong uptrend (new longs entering) |
| Rising | Falling | Short covering (weak signal) |
| Falling | Rising | Strong downtrend (new shorts entering) |
| Falling | Falling | Long liquidation (weak signal) |