Why Do Option Traders Often Look at Strike Price Volume and Open Interest?
Traders examine volume and open interest at specific strike prices to gauge market sentiment and potential support/resistance levels. Volume indicates the trading activity for that strike on a given day, showing immediate demand.
Open interest is the total number of outstanding contracts at a strike, providing insight into the total commitment of market participants. High open interest at a strike price can suggest that it is a critical price level where a large number of positions must be managed or closed, potentially acting as a magnet for the underlying price.
Glossar
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.
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.
Volume and Open Interest
Derivatives ⎊ Cryptocurrency derivatives, encompassing options and futures contracts, derive their value from an underlying asset, typically a cryptocurrency.