Open Interest
The total number of derivative contracts that remain open and have not been closed or settled.
Formula
Open Interest rises when a new buyer and a new seller create a contract, and falls when both sides close
Unit
shares
In depth
Open interest counts outstanding positions while volume counts contracts traded, which is why the two can move in opposite directions — a day of heavy trading in which existing positions are closed produces high volume and falling open interest. Rising open interest means new money is entering the contract, though it says nothing about which side is initiating, since every contract has a buyer and a seller. In India, open interest across contracts is subject to market-wide position limits, and a stock hitting its limit is barred from new positions. Reading open interest as directional information is common and unsupported by the data itself.
Worked example
Open interest rises from 42 lakh to 48 lakh contracts while the underlying falls. Six lakh new contracts were created; whether they were initiated by buyers or sellers is not determinable from the number alone.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Open Interest” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.