Open interest

Open interest is the total number of futures or options contracts in a market that have not yet been closed, offset, or delivered.

Open interest counts live positions, not trading volume. Each time a new buyer and a new seller create a contract, open interest rises by one; each time an existing buyer and seller close out against each other, it falls by one. A single contract can be bought and sold many times in a day, which shows up as heavy volume, without changing open interest at all.

Traders watch open interest alongside price to judge whether a move is backed by fresh commitment or is just existing positions changing hands. Rising open interest alongside rising prices suggests new money is entering on the long side; a price rise on falling open interest often means short sellers are being forced to buy back and close positions. Open interest is usually highest in the front month and thins out further along the forward curve.