Open interest (OI) is the number of futures or options contracts that are still open at the end of a moment in time — contracts that have been bought and sold but not yet closed or expired.
Price tells you where the market is. OI tells you whether traders are committing fresh money to that move or closing their positions. That is why OI sits at the heart of F&O analysis.
How OI goes up and down
Every contract has a buyer and a seller. OI changes depending on whether a trade opens new positions or closes old ones.
- A new buyer and a new seller trade → OI goes up by that many contracts.
- An existing buyer sells to an existing seller who buys back → OI goes down.
- One side opens and the other side closes → OI stays the same; the position just changes hands.
OI vs volume
Volume counts every contract traded today, including trades that open and close within minutes. OI counts only the positions still open. A day can have huge volume and almost no change in OI if most traders are in and out intraday.
Rising OI with rising volume usually means new participation. Falling OI means positions are being closed, even if volume is high.
Why change in OI matters more than total OI
Total OI includes positions built days or weeks ago. Change in OI shows what traders did today. When traders talk about 'fresh writing' at a strike or 'unwinding' in a stock future, they are talking about change in OI.
In NIFTY futures, OI also drops sharply around expiry as positions roll from the current month to the next. Comparing OI across a rollover without adjusting for it gives misleading signals.
Reading OI together with price
OI on its own has no direction. It becomes useful when combined with price change. That combination gives the four classic buildups — long buildup, short buildup, short covering and long unwinding — explained in our buildup guide.