What is the meaning of change in open interest in equity market (options and future market)?
The above posters are a little off in their answers. Open interest (I/O) is the number of open futures/options contracts, ie, contracts that are still open and working in the market. Scott O is a little off, it’s not the number of long contracts, it the number of contracts because for every long, there is someone who’s short. Let’s see if I can give you an example: Let’s say that I’m looking at sugar and I think sugar is going to go down, so I short (sell) a sugar option or futures. You think sugar is going up, so you buy my option or futures. So, in this particular example, open interest is 1 because I wrote (shorted) 1 sugar contract and you bought it. Actually, and increase in O/I is an indicator of increasing short positions, not long. The big players in the markets are commercials and they are generally hedgers meaning they’re primarily short. So an increase in O/I would signify that the commercials are increasing their short positions. So, in the simplest terms, for every futures
