How Is ‘Open Interest’ Used as an Indicator in Derivatives?
Open interest is the total number of outstanding or unclosed derivative contracts, such as futures or options, that have been traded but not yet liquidated. It is a measure of market activity and liquidity.
A rising open interest alongside a rising price can confirm a strong uptrend, while falling open interest suggests contracts are being closed and a trend might be weakening.
Glossar
Falling Open Interest
Trend ⎊ Falling open interest represents a decrease in the total number of outstanding derivative contracts, indicating that market participants are closing existing positions faster than new positions are being opened.
High Open Interest
Indicator ⎊ High Open Interest serves as a critical quantitative indicator of substantial market participation and the overall depth of capital committed to a specific cryptocurrency derivative contract.
Rising Open Interest
Trend ⎊ Rising open interest signifies an increase in the total number of outstanding derivative contracts, indicating that new capital is flowing into the market.
Open Interest
MarketExposure ⎊ Open Interest represents the total notional value of all outstanding, unsettled derivative contracts ⎊ such as options or perpetual futures ⎊ that have not yet been closed out or exercised.