Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled for an asset.
The total open interest does not count, and total every buy and sell contract.
Instead, open interest provides a more accurate picture of the options trading activity, and whether money flows into the futures and options market are increasing or decreasing.
Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled.
Open interest equals the total number of bought or sold contracts, not the total of both added together.
Open interest is commonly associated with the futures and options markets.
Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market.
Open Interest Interpretation
There are four main interpretations of Open Interest: 1) If price increases and open interest increases, then there is strength behind the price move higher. 2) If price decreases and open interest increases, then there is strength behind the price move lower. 3) If price increases and open interest decreases, then there is weakness behind the price move higher. 4) If price decreases and open interest decreases, then there is weakness behind the price move lower.
