How Is 'Open Interest' Used as an Indicator in Derivatives? ▴ Learn

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.

What Is the Relationship between the Open Interest in a Futures Contract and the Liquidity of the Underlying Commodity?

Does the Open Interest of an Option Contract Directly Impact Its Implied Volatility?

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