What is Open Interest (OI)?
Open interest is the total number of outstanding derivative contracts (futures or options) that haven't been settled — it measures market participation and conviction.
Formula
OI increases when a new buyer AND new seller enter the market. It decreases when existing positions are closed.
How to Interpret
Rising OI with rising price = strong bullish trend. Rising OI with falling price = strong bearish trend. Falling OI = trend weakening. Max Pain (strike with highest OI) often acts as a magnet for expiry-day prices.
Typical Ranges
Track OI changes at key strike prices. Unusual OI buildup signals institutional positioning.