#niftyoidata

Open interest is the number of unsettled or outstanding contracts of a particular derivative instrument. It is a metric or data point that helps gauge the traders’ participation in an underlying. Rising Open Interest points to a rise in the trading interest in the underlying. This rise could be a result of rising in trading positions by a variety of trading participants. The participant may be retail or institutional. High open interest means that there is a large number of derivative contracts still open, which means market participants are active in that asset. In the case of futures, if prices rise up and open interest also increases, it suggests that new participants are entering the market despite rising prices, implying an upward or bullish bias. If prices were to move lower and open interest were to increase, it would be suggestive of a downward bias. Continuing, if prices were to move lower and open interest were to decrease, it would be suggestive of long liquidation/long unwinding.

The entire number of unresolved derivative contracts, including options and futures, that are still in effect for an asset is known as open interest. Every purchase and sell contract is added together, regardless of the overall open interest. Open interest, on the other hand, gives a more realistic picture of the options trading activity and shows whether or not capital is flowing more or less into the futures and options markets.

High open interest means that there is a large number of derivative contracts still open, which means market participants are active in that asset. In the case of futures, if prices rise up and open interest also increases, it suggests that new participants are entering the market despite rising prices, implying an upward or bullish bias. If prices were to move lower and open interest were to increase, it would be suggestive of a downward bias. Continuing, if prices were to move lower and open interest were to decrease, it would be suggestive of long liquidation/long unwinding.

The total number of active contracts held by market participants at the conclusion of the day is known as open interest.The total amount of futures or option contracts that have not yet been exercised (squared off), expired, or fulfilled by delivery can also be used to define it.The futures market is mostly affected by open interest. For futures and options contracts, open interest, or the total number of open contracts on a security, is frequently used to validate trends and trend reversals.