Open interest explained
Open interest (OI) is the number of futures or options contracts that are still open. It tells you whether money is coming into a move or leaving it - and, for options, where traders expect the price to stop. Here is how it works, with pictures.
- How every trade changes open interest
- The four price + OI buildups - then test yourself
- Reading call vs put OI for support and resistance
What is open interest?
Every futures or options contract has two sides: a buyer and a seller. When a new buyer and a new seller trade, a contract is created, and it stays “open” until one of them closes it, it is exercised, or it expires. Open interest is the count of those open contracts.
Each contract is counted once, not twice: one long and one short make one unit of open interest. Quantsapp shows OI in shares (contracts × lot size), so 1 lot of NIFTY (lot size 65) adds 65 to OI.
How each trade changes open interest
OI rises only when both sides are opening, falls only when both are closing, and stays the same when a position just changes hands. Four trades in one NIFTY futures contract:
- Asha buys 1 lot from BalaBoth are opening a new position: Asha is long, Bala is short.+1
- Chirag buys 1 lot from DevTwo more new positions.+1
- Esha buys 1 lot from AshaAsha closes her long and Esha opens one. The position just changes hands.0
- Bala buys back 1 lot from ChiragBala closes his short and Chirag closes his long. One contract disappears.−1
| Buyer is… | Seller is… | Open interest |
|---|---|---|
| Opening a new long | Opening a new short | Rises |
| Opening a new long | Closing an old long | No change |
| Closing an old short | Opening a new short | No change |
| Closing an old short | Closing an old long | Falls |
Open interest vs volume
| Volume | Open interest | |
|---|---|---|
| Counts | Every contract traded today | Contracts still open right now |
| Resets | To zero each day | Never - it carries over until positions close or expire |
| Tells you | How active the market is | How much money is committed to positions |
| In the ledger above | 4 contracts | 1 contract at the end |
Price + open interest: the four buildups
Open interest alone has no direction. Pair it with the price move and you get four readings - the basis of “built-up” analysis for futures.
Call OI vs put OI: reading options open interest
In options, most open interest comes from sellers (writers), who sell where they expect the price not to go. So the strikes with the most OI act like walls: heavy call OI above the price is read as resistance, heavy put OI below it as support.
In this example the most call OI sits at 25,500 and the most put OI at 25,000: option sellers are betting NIFTY stays between the two until expiry. If the price breaks through a wall, sellers there rush to cover, which can speed the move up.
Change in open interest
Total OI shows where positions have built up over the whole series; change in OI (today’s OI minus the previous close) shows what traders are doing today. A strike that adds lakhs of shares of call OI during a fall is where fresh resistance is being written; a big drop in put OI shows support being abandoned.
Read change in OI strike by strike, and alongside the price: a rising market with fresh put writing below is a stronger signal than one with no new positions at all.
Put-call ratio (PCR) from open interest
| PCR | What it usually means |
|---|---|
| Above about 1.3 | Heavy put writing - traders see support. Very high readings can mean the market is overbought. |
| About 0.7 to 1.3 | Balanced positioning, the usual range for NIFTY. |
| Below about 0.7 | Heavy call writing - traders see resistance. Very low readings can mean the market is oversold. |
PCR is a summary. The OI by strike above tells you where the support and resistance are.
Common mistakes with open interest
- Reading OI without price. Rising OI is bullish only when the price rises too.
- Treating option OI as buyers’ bets. Most option OI is written (sold), so heavy call OI is a ceiling, not a bullish bet.
- Ignoring expiry. OI falls sharply in the last days of a series as positions close or roll; compare like with like.
- Looking only at totals. Where the OI sits - which strikes, which expiry - matters more than the total.
- Forgetting lot size changes. Use OI in shares, not contracts, when comparing across a lot size change.
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Open interest on video
13:43How to Enter a Trade with OI and Change in OI
15:41PCR Trading Strategy with OI PCR and Volume PCR
6:09Built-up Breadth: Gauge Changes in Market SentimentFrequently asked questions
What is open interest in simple words?
Open interest is the number of futures or options contracts that are still open - bought and sold, but not yet closed, exercised or expired. Every open contract has a buyer and a seller, so each contract is counted once.
What is the difference between open interest and volume?
Volume counts every contract traded during the day, including positions opened and closed the same day. Open interest counts only the positions still open at a point in time. A day can have huge volume and almost no change in open interest if most trades just pass positions from one trader to another.
Does rising open interest mean the market will go up?
Not by itself. Rising open interest means new money is entering. Read it with price: price up with OI up is long buildup (bullish), price down with OI up is short buildup (bearish).
What does change in open interest tell you?
Change in OI is today’s open interest minus the previous close’s. A large rise at one strike shows where new positions are being built today; a fall shows positions being closed.
What does high call open interest mean?
Heavy call OI at a strike means many traders have sold calls there and expect the price to stay below it, so it is often read as resistance. Heavy put OI at a strike is read as support for the same reason.
What is a good put-call ratio?
PCR is total put OI divided by total call OI. Readings around 0.7 to 1.3 are common for NIFTY. A very high PCR (heavy put writing) is often read as support building, a very low one as resistance - but extreme readings can also signal crowded positioning, so read PCR with price and the OI by strike.
Is open interest shown in contracts or shares?
Exchanges publish both. Quantsapp shows open interest in shares (contracts × lot size), so numbers stay comparable when a lot size changes.
Can open interest go down while the price rises?
Yes - that is short covering: traders who were short are buying back to close, which pushes the price up while open interest falls. Such rallies are often less durable than ones backed by rising OI.
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For education only; not investment advice. Derivatives trading carries substantial risk. Disclaimer