Open Interest

Open interest is the total number of derivative contracts — futures, perpetuals, or options — that are currently open and not yet closed or settled. It measures how much money is committed to positions in a market, and it changes only when new positions are created or existing ones are closed, not when contracts merely change hands.

For example, if a trader opens a new long and another trader opens a new short against them, open interest rises by one contract. If an existing long sells to an existing short who is covering, both positions close and open interest falls by one. If an existing long sells to a brand-new buyer, open interest is unchanged.

Traders watch open interest alongside price: rising price with rising open interest suggests new money driving a trend, while rising price with falling open interest suggests shorts covering, a move with less fuel behind it. Very high open interest also means more positions available to be liquidated in a cascade. A common misconception is confusing open interest with volume; volume counts all trades over a period, while open interest is a snapshot of positions still outstanding.