Stock Market · Futures Trading

Open interest

Open Interest (OI) is the total number of outstanding (open) futures or options contracts that haven't been settled or closed. It's a measure of money committed to a position, not trading volume.

OI vs Volume: the key distinction

Volume = number of contracts traded in a session (one trade creates one unit of volume).

OI = contracts that remain open at end of day.

When you buy a new contract, OI increases. When you close an existing position, OI decreases.

Why OI matters

OI tells you how many participants have committed to a view, the crowd's conviction.

> Rising OI + Rising price = new buyers entering. Trend is strong. Conviction is building.

> Rising OI + Falling price = new short sellers entering. Bears are active. Trend is strong down.

> Falling OI + Rising price = short covering (shorts buying back). Rally may not be sustainable.

> Falling OI + Falling price = long liquidation. Bulls giving up. Potential trend reversal.

OI build-up at specific strikes

In options, high OI at a specific strike indicates where large positions are concentrated. These levels often act as magnets (max pain concept) or as support/resistance.

NSE websitepublishes daily OI for all F&O contracts

Open Interestmoney committed, not money traded

PCR (Put-Call Ratio)

OI in puts ÷ OI in calls. Above 1 = more puts than calls = bearish bias. Below 0.7 = more calls = bullish bias. Extreme values often signal contrarian reversals.

Takeaway. Rising OI alongside a move means new positions are backing it; falling OI means the move is existing positions closing rather than fresh conviction. OI alone cannot tell you which, because the same number appears in both cases. Price and volume are what disambiguate it.