By Marco BösingWhat Is Open Interest?
Open interest (OI) is the total number of all open, unsettled futures contracts on an exchange. Every contract always has a buyer (long) and a seller (short) — open interest counts one side of these pairs.
Unlike trading volume, which measures the number of contracts traded within a period, open interest shows the sum of all active positions at a given point in time.
How Does Open Interest Change?
Open interest rises or falls depending on whether new positions are opened or existing ones are closed:
Open Interest Increases
When a new buyer purchases a contract from a new seller, a new contract pair is created. Both sides are new to the market.
Example: Trader A opens a long position, Trader B opens a short position → OI increases by 1
Open Interest Stays the Same
When an existing buyer sells to a new buyer, only the holder of the long position changes. The total number of open contracts remains unchanged.
Example: Trader A (long) sells to Trader C (new long) → OI remains the same
Open Interest Decreases
When an existing buyer closes their position with an existing seller as counterparty, both positions are dissolved.
Example: Trader A (long) closes against Trader B (short) → OI decreases by 1
Open Interest as a Market Indicator
Open interest provides valuable information about the strength and sustainability of price movements.
Rising Prices + Rising OI
New money is flowing into the market, supporting the uptrend. This is considered a strong trend, as new buyers are entering.
Rising Prices + Falling OI
The price increase is driven by short covering (closing of short positions), not new buyers. This suggests a weaker trend.
Falling Prices + Rising OI
New money is flowing into the market on the short side. This confirms the downtrend as sustainable.
Falling Prices + Falling OI
The price decline is driven by long liquidation. Existing buyers are leaving the market, which can signal a potential bottom formation.
Open Interest vs. Volume
| Characteristic | Volume | Open Interest |
|---|---|---|
| Measures | Contracts traded per period | Total open contracts |
| Updated | In real time | Daily (after market close) |
| Indicates | Trading activity | Capital commitment in the market |
| Can drop to | 0 (outside trading hours) | 0 (only if all positions are closed) |
Both metrics complement each other: high volume combined with rising open interest signals strong conviction among market participants.
Open Interest at Contract Expiration
In the weeks before expiration day, open interest typically drops sharply as traders roll their positions into the next contract month. This process is called a contract roll.
Comparing open interest between the expiring and the new contract helps determine the optimal timing for your own contract switch.
Frequently Asked Questions
Where Can I Find Open Interest Data?
Open interest data is published daily by the exchanges. The CME Group provides it on their website. Many trading platforms and data providers integrate open interest directly into their charts.
Is High Open Interest Good or Bad?
Neither — high open interest simply indicates that many market participants hold positions. This means high liquidity, which is generally favorable for traders. The interpretation depends on whether OI is rising or falling and its relationship to price movement.
How Does Open Interest Differ Between Futures and Options?
The concept is identical: in both cases, open interest measures the number of open contracts. However, for options, OI exists separately for each strike price and expiration date, making the analysis more complex.
Can Open Interest Be Negative?
No. Open interest cannot fall below zero, as it represents the total number of active contract pairs.