Open Interest

What it is

Open Interest (OI) is the total count of derivative contracts that are currently open — not yet squared off, exercised or expired — at a given strike or for a given future. Unlike volume, which counts every trade in a day, OI is a running tally of live positions. OI rises when a new buyer and new seller create a fresh contract, and falls when existing positions are closed.

How traders use it

OI shows where money is committed and is read alongside price to judge conviction. Rising price with rising OI suggests fresh long buildup (strength); falling price with rising OI suggests fresh short buildup (weakness). Falling OI signals positions being unwound. In options, high OI at a strike often marks a key level — heavy call OI can act as resistance, heavy put OI as support — which is why traders watch the option chain closely near expiry.

In India

OI is central to Nifty and Bank Nifty option trading. The NSE publishes OI data live, and traders study the OI distribution across strikes (the "max pain" level, PCR or put-call ratio) to gauge where the index might gravitate by expiry. Tools on Kite, Sensibull and others visualise OI buildup in real time.

Common mistakes

Beginners confuse OI with volume — they measure different things. Others treat high OI at a strike as a guaranteed support/resistance, when it's only a probabilistic clue that can break on strong moves. OI analysis is interpretive, not predictive: the same OI change can mean different things depending on price action. Use OI as one input — combined with price action, volume and broader context — rather than a standalone signal, and remember that large institutional and proprietary positions can shift the entire picture quickly, sometimes deliberately trapping retail traders who read the chain too literally near expiry.