7.1 – Open Interest and its calculation
Open Interest (OI) is a number that tells you how many futures (or Options) contracts are currently outstanding (open) in the market. We will learn more in this video.
In the following final video from this video series, we will learn how to short futures.
We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- Open Interest (OI) is a number that tells you how many contracts are currently outstanding (open) in the market.
- OI increases when new contracts are added. OI decreases when contracts are squared off.
- OI does not change when contracts are transferred from one party to another.
- Unlike volumes, OI is continuous data.
- On a stand-alone basis, OI and Volume information does not convey information; hence it makes sense always to pair it with the price to understand the impact of their variation.
- Abnormally high OI indicates high leverage. Beware of such situations.
Great video Team Zerodha! I went through the entire video series on ‘Futures’ and I must say you guys have done a fantastic job of explaining Futures. I had read about these concepts in books, articles and even some videos. But what differentiates your videos is clear information, simply and confidently presented by Prateek with excellent graphics. Take a bow guys!
Thanks, Namrata! Glad you liked the content 🙂
I’m truly grateful to the content that your team is providing, great job!
God bless y’all 🙂
Thanks for such a nice and simply explained video
Glad you liked it, Pawez. Happy learning 🙂
Can we Sell Futures if we don’t have the holdings, I mean short selling is allowed?
Yes, you can sell/short futures.
How long it takes to update OI?
NSE does this real time I believe.