Definition
Open Interest Change
Change in open interest is the day-over-day difference in outstanding contracts, signalling whether positions are being added or closed.
A rise in OI means new contracts are being created (fresh positions), while a fall means existing ones are being closed. Read together with price, the change in OI is what distinguishes a long build-up from short covering, or a short build-up from long unwinding.
Indian F&O traders watch the change in OI alongside price on Nifty, Bank Nifty, and stocks throughout the session to judge the conviction behind a move. A breakout backed by a sharp rise in OI is treated as far more reliable than one where OI is flat or falling.
Related terms
- Open InterestOpen interest is the total number of outstanding futures or options contracts that have not yet been closed.
- Long Build-upA long build-up is when both price and open interest rise together, signalling fresh buying and bullish positioning.
- Short CoveringShort covering is when price rises while open interest falls, as traders buy back short positions to close them.
- Open Interest AnalysisOpen interest analysis studies changes in outstanding F&O contracts to gauge where support, resistance, and positioning lie.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.