What Is Open Interest? Definition and Examples
By Forex & Brokers DeskUpdated Nov 10, 2026
Definition
Open interest is the number of futures or options contracts still outstanding, opened and not yet closed, exercised, expired or settled. It measures positions, while volume measures trades.
Key takeaways
- Each open contract has one long and one short holder, so it is counted once, not twice.
- Open interest rises only when both sides open new positions and falls when both sides close.
- Exercise, assignment, expiration, delivery and cash settlement all reduce open interest without a trade.
- Volume resets each session, while open interest carries over from day to day.
Open interest is the total number of derivative contracts, such as futures or options, that are still outstanding at a given point: they have been opened and have not yet been closed by an offsetting trade, exercised, assigned, delivered or allowed to expire. Each open contract has one long holder and one short holder, so it is counted once, not twice. Open interest measures positions, while trading volume measures transactions.
What Open Interest Measures
Open interest belongs to markets where contracts are created by trading rather than issued in a fixed supply. A company has a set number of shares outstanding. A futures contract or a listed option, by contrast, comes into existence when two parties agree to open a position, and it ceases to exist when that obligation is closed or ends.
That is why ordinary shares in a stock’s cash market show no open interest figure. In the stock market, open interest applies to stock options and single-stock and index futures, and it appears on an option chain or futures quote next to volume. The label is often shortened to OI or Open Int. On an option chain, “call OI” is the open interest for a specific call strike and expiration, and “put OI” is the same count for puts.
Open interest is a contract count. A figure of 1,000 means 1,000 contracts are open, whatever each contract’s size or notional value. To estimate the value represented, multiply open interest by the contract multiplier and the underlying price. This gives notional exposure, not the money traders actually committed, and the same adjustment is needed before comparing products with different multipliers.
How Open Interest Changes
Every trade has a buyer and a seller, and each side is either opening a new position or closing an existing one. The combination determines what happens to open interest:
| Buyer | Seller | Effect on open interest |
|---|---|---|
| Opens a new long | Opens a new short | Increases by the number of contracts |
| Opens a new long | Closes an existing long | No change (position transferred) |
| Closes an existing short | Opens a new short | No change (position transferred) |
| Closes an existing short | Closes an existing long | Decreases by the number of contracts |
Positions also leave the count without a trade. An option that is exercised and assigned, an option that expires, and a futures contract that goes to delivery or cash settlement all reduce open interest.
Calculating Open Interest
The daily change can be written as:
Change in OI = contracts where both sides opened − contracts where both sides closed
Today’s open interest equals yesterday’s figure plus that change, minus any contracts removed by exercise, expiration or settlement. Exchanges calculate the figure from position data reported by clearing members, which is why it is typically published once per session rather than tick by tick. Volume, by contrast, accumulates trade by trade during the day.
Example of Open Interest
This hypothetical example follows one option series that starts with zero open interest. Five traders (A to E) take part.
| Day | Trade | Opening or closing | Volume | Open interest |
|---|---|---|---|---|
| 1 | A buys 1 contract from B | Both open (A long, B short) | 1 | 1 |
| 2 | C buys 5 contracts from D | Both open (C long, D short) | 5 | 6 |
| 3 | A sells 1 contract to D | Both close (A exits long, D reduces short) | 1 | 5 |
| 4 | E buys 5 contracts from C | E opens, C closes | 5 | 5 |
After four days, total volume is 12 contracts, but only 5 contracts remain open: E is long 5, and the shorts are B with 1 and D with 4. Day 4 shows the key distinction. Five contracts changed hands, yet the number of open positions did not move, because C simply handed a long position to E.
Open Interest vs. Trading Volume
Volume counts how many contracts traded during a period and resets each session. Open interest counts how many contracts remain open and carries over from day to day. A contract can trade many times while adding to open interest only once.
Comparing them gives context. In a hypothetical contract with 200,000 contracts traded and open interest of 1 million, the day’s turnover equaled 20% of all outstanding positions. Whether those trades opened new positions or rotated existing ones shows up in the next open interest figure, depending on whether the total grew, shrank or stayed flat.
How Traders Use Open Interest
Gauging participation and liquidity
A contract with large open interest has many positions outstanding, so many holders may eventually need to trade out. Traders often take this as a sign that counterparties will be easier to find and the bid-ask spread narrower than in a thinly held series. Open interest is not a direct measure of liquidity, though. The quoted spread and recent volume show current trading conditions more directly.
On an options chain, comparing OI across strikes shows where positions are concentrated. Strikes with very low open interest can be harder to trade at a fair price.
Reading price and open interest together
A standard technical-analysis framework pairs the direction of price with the direction of open interest:
- Price up, OI up: new long positions are being opened faster than shorts exit, read as fresh buying behind the move.
- Price up, OI down: the rise comes mainly from shorts closing (short covering) rather than new buying, often read as a weaker advance.
- Price down, OI up: new short positions are being added, read as fresh selling pressure.
- Price down, OI down: longs are exiting (long liquidation), read as a decline driven by closing rather than new bets.
This is an interpretive convention, not a rule. Rising open interest means more positions exist, not that buyers “won,” because each new long was matched by a new short. A rise during apparent long liquidation, for example, means new shorts are entering as old longs leave.
Calls, puts and the open interest ratio
In options, traders compare total put OI with total call OI for an underlying asset, producing a put-call open interest ratio. A high put OI on its own does not mean the price will fall. A put option can be held as a hedge on a long stock position as easily as a bearish bet, and every open put has a writer on the other side. The same caution applies to large open interest at a single call option strike.
Futures rollover
In futures, open interest tends to migrate from the expiring contract month to the next one as holders roll positions forward. A falling OI figure in the front month near expiry can simply reflect this rollover rather than traders leaving the market. Looking at total open interest across all months, or at the next contract, gives a clearer picture.
Limitations of Open Interest
- No direction. Longs and shorts always net to zero, so open interest cannot say which side is right or which side initiated, and it does not forecast price action.
- Lagging. It is typically reported after the session, so intraday changes are invisible until the next update.
- Hidden purpose. Hedges, spreads and speculative bets count the same, so a large figure may reflect hedging rather than conviction.
- Contract count only. Raw figures ignore contract size and notional value, so they are not comparable across products.
- Calendar effects. Expiration, rollover and exercise can move the figure for reasons unrelated to sentiment.
FAQs
Does very high open interest signal a reversal?
Not by itself. Some traders view open interest that keeps climbing late in a long trend as a sign that positions are crowded, which could unwind sharply. That is a judgment about positioning, and open interest alone cannot confirm when, or whether, a reversal happens.
The Bottom Line
Futures and options traders can use open interest to see where positions are concentrated and whether a price move is backed by new positions or by closing trades. The figure shows no direction, arrives after the session, and can shift with expiration or rollover. Read it alongside volume, the bid-ask spread and contract size before drawing conclusions about sentiment or liquidity.
