Relationship between Open Interest, Price and Volume In this case, the open interest will not change.
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The third and final possibility is one old trader passing off his position to a new trader ( one old buyer sells to one new buyer). If both traders are closing an existing or old position ( one old buyer and one old seller) open interest will decline by one contract. To summarize, if both parties to the trade are initiating a new position ( one new buyer and one new seller), open interest will increase by one contract. Total Open Interest:2ĭay 4: Pooja and Heena buy one lot of Nifty 8300 CE, and Deepika sells her two lots. Thus, effectively one Lot of Nifty CE gets offloaded from the market. Total Open Interest:3ĭay 3: Ayesha squares off her entire position (1 lot), and Heena buys one lot. Total Open Interest: 1ĭay 2: Deepika buys two lots of Nifty 8300 CE, and Heena sells two lots of Nifty 8300 CE. Let’s consider a hypothetical situation to understand the concept of Open Interest in a better way:ĭay 1: Ayesha buys one lot of Nifty 8300 CE, while Pooja sells one lot of Nifty 8300 CE. Open interest tends to zero value at the expiry day of the derivatives market as everyone squares off their open positions.Ĭheck out the below image which shows Open Interest of Nifty futures: It can also be defined as the total number of future or option contracts that have not been squared off. For options, every strike price of the option contract has an individual open interest value. Open Interest represents the number of outstanding contracts for future and option contracts. It has been redirected to the current article as the updated version of excel sheet can now fetch open interest data for Nifty, Banknifty, and any other index or stock of your choice. Note : There was another article titled “ Banknifty Options Open Interest Analysis Excel Sheet” in this website. The excel sheet is downloadable from the end of this article.Ĭheck out the other popular Excel sheets posted on this blog here.
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This article would introduce you to the concept of open interest, and also demonstrate open interest analysis excel for option contracts. It also measures the flow of money in the market. It generally confirms the market trend (whether it’s rising, falling, or sideways) when used in conjunction with other parameters like volume and price. Open Interest is believed as a Confirming Indicator by the majority of traders and investors.