Open Interest Definition - What Is Open Interest and How Do I Calculate It?

Open interest is the total number of outstanding contracts for any given stock, commodity, bond, index, or another financial instrument. It represents the amount of money that investors are willing to pay for those instruments at current prices.

How to Calculate Open Interest?

To calculate open interest, multiply the price per contract by the number of contracts outstanding. So, if the price per contract is $100 and there are 100 contracts outstanding, then the open interest would be $10,000.

In conclusion, calculating open interest is one of the most important metrics to track when analyzing market trends.

Open interest is calculated by adding up the total value of all outstanding contracts on an asset. For example, if there were 100 contracts on gold with a price of $1,000 per ounce, then the open interest would equal $100,000.

Why is Open Interest Important?

Open interest is important because it provides insight into the current market sentiment. A rising trend in open interest indicates that investors believe prices will continue to rise. Conversely, falling open interest suggests that investors expect prices to fall.