What It Means
Open Interest (OI) is the total number of option or futures contracts for a given strike and expiry that are still open, meaning neither side has closed the position yet. It's a headcount of live positions, not a count of trades.
How It Works
OI goes up when a new buyer and a new seller create a fresh contract between them. It goes down when an existing position gets closed out. If a trader just sells their contract to someone else who's opening a new position, OI doesn't move; the seat just changed hands.
This is what separates OI from volume. Volume resets to zero every day and counts every trade executed, including the same contract flipping between traders ten times. OI carries over day to day and only reflects contracts still standing.
Example
Say the Nifty 24,500 call has an OI of 12 lakh contracts at market open. By the close, if OI has risen to 14 lakh, ₹2 lakh worth of fresh positions were opened that day, on top of whatever was already outstanding. A jump like this alongside rising price is often read as fresh long buildup.
Warning
Don't read rising OI alone as bullish or bearish. Rising OI just means more positions were opened, whether by buyers or writers, on the call side or the put side. It has to be read alongside price direction to mean anything.
Related Terms
- F&O (Futures & Options) — the contract category OI is measured within