Open Interest
Volume increased. Why didn't OI increase? Follow a contract as traders open, transfer and close positions.
What this page teaches
The idea: Open interest (OI) counts the contracts that are still open. Volume counts every trade. They are different numbers, so they can move differently.
Words to know
- Open interest (OI)
- how many contracts are still open.
- Volume
- how many contracts changed hands.
- Rollover
- closing a contract that is about to expire and opening the next one.
What you do
Open a contract, pass it to someone else, then close it. Watch both counters after each step.
What to look for
Passing a contract to a new owner adds to volume. It does not change OI.
Practice story: volume went from 1 to 2, but OI stayed at 1. Why didn't the trade increase OI?
What you will learn
- Count open contracts and trades separately.
- See what happens when a contract changes hands.
- Compare price and OI without guessing the next move.
Watch one contract, step by step
Three friends trade one contract. Watch the two counters after each step.
Step 1 of 3
- TradeAshabuys
- TradeRavisells
- Meenawaits
- Open interest
- 1
- up 1
- contracts still open
- Volume
- 1
- up 1
- trades so far
Asha buys one contract from Ravi. A new contract opens.
Step 2 of 3
- Ashastill holds
- TradeRaviis out
- TradeMeenatakes Ravi's side
- Open interest
- 1
- no change
- contracts still open
- Volume
- 2
- up 1
- trades so far
Ravi passes his side to Meena. A trade happens, but no new contract opens.
Step 3 of 3
- TradeAshacloses
- Raviis out
- TradeMeenacloses
- Open interest
- 0
- down 1
- contracts still open
- Volume
- 3
- up 1
- trades so far
Asha and Meena close the contract. Nothing is open now, but the trade still counts.
Volume counts every trade. Open interest counts only the contracts still open.
Price and OI together: four cases
Look at how the price moved and how OI moved. Each pair has a name.
- Price up
- OI up
Long build-up
New buyers are opening fresh positions.
Example: price 100 to 104, OI 2,000 to 2,300.
- Price up
- OI down
Short covering
Sellers are buying back to close. That buying can lift the price.
Example: price 100 to 104, OI 2,000 to 1,700.
- Price down
- OI up
Short build-up
New sellers are opening fresh positions.
Example: price 100 to 96, OI 2,000 to 2,300.
- Price down
- OI down
Long unwinding
Buyers are selling to close. That selling can pull the price down.
Example: price 100 to 96, OI 2,000 to 1,700.
This example does not show who the real traders are. OI and price together cannot tell you where the market will go.
Guided path
Step 4 of 8 - Open Interest
This step answers: What actually changes when open interest moves?
Before you start: Know that an option chain has separate contract rows.
Try the scenario
Market X-Ray
Market X-Ray: Open Interest
Choose a scenario, change one assumption and read the visible result.
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