Open Interest (OI)

OI Glossary

To know about open Interest OI first thing to remember that market exist because of buyers as well sellers . In derivative contracts whether options or futures a buyer always known as long and seller as short . If both parties to the trade are commencing a new position as one new buyer and one new seller, open interest will increase by one contract. If both traders (buyer &seller) decides to close their positions than open interest will reduce by one contract . Similarly if one old trader or buyer of contract passes of his position to a new buyer no changes happens in open interest .Please note that open interest (OI) equals the total number of contracts, not the total of each transaction by every buyer and seller. In other words, OI is the total of all the buys or all of the sells, not both. To know OI in any market ,we should know total of either buyer or seller not sum of both .

Close Menu
error: Content is protected !!