Open Interest
The total number of outstanding futures or options contracts that have not been settled, closed, or delivered — a measure of market activity and liquidity.
What is Open Interest?
Open interest is the total number of outstanding derivative contracts — futures or options — that remain open and have not yet been settled, offset by an opposite trade, or fulfilled by delivery. It is different from trading volume: volume counts every transaction executed during a period, while open interest reflects only positions that remain active. Rising open interest indicates that new money is entering the market and positions are being established, which typically signals increased conviction among traders. Falling open interest suggests positions are being closed and money is exiting. Open interest is reported after each trading session and is widely watched by commodity and options traders as an indicator of market strength, liquidity, and potential price trends.
Example
The December S&P 500 futures contract shows 2.8 million contracts of open interest with average daily volume of 900,000. If a portfolio manager and a hedge fund each enter into a new 1,000-contract futures position (one buying, one selling), open interest increases by 1,000 — because one new long and one new short position have been created.