What Is the Relationship between Open Interest and the Effectiveness of Arbitrage? ⎊ Path

What Is the Relationship between Open Interest and the Effectiveness of Arbitrage?

High open interest, which is the total number of outstanding contracts, suggests a deeper and more liquid market. In a highly liquid market, arbitrageurs can execute their trades with less slippage, making the arbitrage more effective.

However, very high open interest can also indicate a strong market bias, leading to a wider basis and thus more opportunities for arbitrage.

How Does the Frequency of Rebalancing Affect the Overall Cost and Effectiveness of the Hedge?

How Does Market Depth Affect the Effectiveness of Arbitrage?

How Does a High Positive Funding Rate Affect Market Sentiment?

In Cryptocurrency Futures, How Does High Open Interest Affect Market Liquidity and Volatility?

What Is the Relationship between a Cryptocurrency’s Trading Volume and Its Potential for High Slippage?

Does a High Volume of Small Trades Necessarily Indicate High Market Depth?

Why Do Option Traders Often Look at Strike Price Volume and Open Interest?

What Is the Concept of ‘Open Interest’ and How Does It Indicate Potential Options Liquidity?

Glossar

Open Interest

Derivatives ⎊ Open interest, within the context of cryptocurrency derivatives and financial options, represents the total number of outstanding contracts that have not been settled or closed.

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.