What is open interest?

Open interest is the number of option contracts on a strike that are still held open, not yet closed out or exercised. It is one of the most reliable figures on the options chain because it is settled once a day, not estimated.

How it is counted

Every option contract has a buyer and a seller. When both sides open a brand new position, open interest rises by one. When both sides close, it falls by one. If one trader simply passes an existing contract to another, open interest does not change at all. The exchanges tally these opens and closes after the session and publish one open interest figure per contract the next morning, which is why it is a settled number rather than a live one.

Volume vs open interest

This is the distinction that trips people up. Volume counts how many contracts traded today and resets to zero every morning, so it is noisy: the same contract can be bought and sold many times before the close. Open interest counts how many contracts are still open and carries over from day to day. Think of volume as the day's foot traffic and open interest as how many people are still in the building. Because open interest is settled rather than tallied from a partial trade feed, it is the sturdier of the two numbers to lean on.

Why traders watch it

• Liquidity. A strike with large open interest is usually easier to trade with a tighter spread than a thin one.
• Fresh positioning. When a contract's daily volume runs well above its open interest, it points to new positions being opened rather than old ones changing hands.
• Walls and levels. Strikes with very large open interest can act like magnets or barriers into expiry, and they feed the max pain calculation, the strike where the most contracts would expire worthless.

How MomentumSift uses it

MomentumSift shows open interest per strike as a ladder of calls versus puts, highlights the biggest walls as levels on the chart, and uses the volume above open interest reading to flag fresh positioning in the flow feed. Because open interest is the settled, reliable figure, it anchors the positioning view, while daily volume, which the free feed reports only partially, is used for ranking activity rather than as an exact count. See the busiest names in the most active options screener.

FAQ

What is open interest in options?

The number of option contracts on a given strike and expiry that are still held open, not yet closed or exercised. It rises when new positions open and falls when they close, and it is reported once a day after settlement.

What is the difference between volume and open interest?

Volume is how many contracts traded today and resets each morning. Open interest is how many contracts remain open and carries over, updating once after settlement. Volume is the day's activity; open interest is the standing position.

Is high open interest bullish or bearish?

Neither by itself. It means a strike is heavily populated and usually more liquid, but every open contract has a buyer and a seller, so it does not show direction. It matters most as a level into expiry.