Open Interest

Open interest is the total number of contracts of a specific option that are currently open — bought or sold and not yet closed, exercised, or expired. It's different from volume, which counts how many contracts traded during a single session and resets every day. Open interest, by contrast, carries forward from one day to the next: it rises when traders open new positions and falls when existing positions are closed out, so at any given moment it reflects the net number of positions still active — not simply a running total of everything that's ever traded on that contract. A contract can have low volume on a quiet day but still carry high open interest because a large number of positions opened weeks ago remain open, or it can see a single day of huge volume without much of it translating into lasting open interest — for example, if much of that volume was traders opening and closing positions within the same day, leaving no net change in open contracts. Traders read open interest alongside volume as a rough gauge of liquidity: higher open interest generally means more market participants are holding positions in that specific contract, which tends to produce tighter bid-ask spreads and make it easier to enter or exit a position without moving the price much.