Open interest in one line
Every futures or options contract has a buyer and a seller. Open interest (OI) counts how many of those contracts are still open at a point in time. It is reported per strike and per expiry, and NSE updates it during the day.
How OI goes up and down
- OI rises when a new buyer and a new seller open a fresh contract.
- OI falls when an existing buyer and an existing seller both close their positions.
- OI stays the same when an existing position simply changes hands (one trader closes, another opens).
At expiry, all remaining OI of that contract goes to zero, because every contract is settled.
Open interest vs volume
Volume is how many contracts traded today. OI is how many are still open. A strike can have high volume but little change in OI if most trades were people closing positions. That is why traders look at both together.
How traders read OI
Large call OI at a strike above the price shows many call writers there, and large put OI below the price shows many put writers. Traders often treat these strikes as areas the market is watching. Change in OI shows where new positions are being added today.
OI describes positioning — it does not tell you which way the price will move. Read it together with price, and with the put–call ratio.