Option what is open interest

Someone needs to look at the big picture and keep track of the overall number of outstanding option contracts in the marketplace. Simply put, open interest is the number of option contracts that exist for a particular stock.

They can be tallied on as large a scale as all open contracts on a stock, or can be measured more specifically as option type call or put at a specific strike price with a specific expiration. Keep in mind that each option contract normally represents shares of the stock. This brings up a point worth noting: although you can keep track of trading volume on any given option throughout the day, open interest is a lagging number: it's not updated during the course of a trading day.

Instead, it is officially posted by The OCC the morning after any given trading session, once the figures have been calculated. For the rest of the trading day the figure remains static. Choose your reason below and click on the Report button. This will alert our moderators to take action. Nifty 17, Honeywell 45, Market Watch. ET NOW.

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Deep Dive Into Cryptocurrency. ET Markets Conclave — Cryptocurrency. Reshape Tomorrow Tomorrow is different. Let's reshape it today. Open interest along with price and trading volume provides insight into market trends—without requiring visibility to full market depth.

In this way, options trading firms can reduce costs by only accessing the SIP and forgoing pricier, depth feeds. By using the OPRA feed and analyzing open interest, options traders can cut down on market data costs while still trading competitively.

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From resource-rich companies in mining and energy…. Skip to main content. What is Open Interest? Indications from High Open Interest On its own, high open interest simply indicates that the current market trend driving the underlying price is strong or, in other words, that there is investor confidence that the trend will continue. Open Interest and Underlying Price To derive more nuanced information about market movement from open interest, compare it to the price of the stock underlying the option.

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