Glossary · Options
Open Interest: Counting the Option Contracts Still Open
Volume tells you how busy a strike was today. Open interest tells you how many contracts are still out there, held by someone, waiting to be closed, exercised or left to expire.
Definition
Open interest The number of option contracts at a given strike and expiration that have been opened and not yet closed, exercised or expired.
Also called OI.
Most option chains put two columns side by side, Volume and Open Int, and at a glance the figures in them look like the same kind of number, a count of contracts at one strike on one expiration date. They count different things, and mixing them up leads to bad fills.
Open interest and volume
Volume is a count of contracts traded today. It starts at zero every morning. Each trade adds to it, opening or closing.
Open interest is a running total of positions. It does not move during the session; the figure you see during the day reflects positions as of the previous close, and it is updated once a day, overnight, after the day’s trades have been cleared and each side has been classified as opening or closing. That lag matters. A strike can show heavy volume this morning and the same open interest it had yesterday, because the new positions will not be counted until tomorrow.
Every option contract has a buyer and a seller. Open interest counts contracts, one per pair.
How a trade changes the count
It depends on what each side of a trade was doing.
The third case surprises people. Say you sell a call you already own to a brand-new buyer. You have passed an existing contract along. Volume records the trade. Open interest stays flat, since the number of contracts outstanding is what it was.
Exercise and expiration also reduce the total. When an option expires or is exercised, it leaves the count.
Why it matters for your order
The practical use is liquidity. Strikes with many open contracts usually draw more quotes. Tighter bid-ask spreads tend to follow. A strike with a handful of open contracts may show a wide spread and a thin market maker quote, which is fine for getting in and much less fine when you want out in a hurry, since the price you can exit at may sit well below the midpoint the chain displays.
Before you size a position, check open interest at your exact strike and expiration. If the number is small relative to how many contracts you want, the order itself could be a large share of the market in that line, and how many options contracts to buy goes through the sizing side of that question.
Where it shows up
The chain shows open interest for each strike and expiration. It sits beside volume, bid and ask. Many platforms also chart open interest by strike. Crowded strikes stand out at once.
A freshly listed expiration starts with zero open interest at every strike. The count builds as traders open positions, so a thin number on a brand-new weekly expiration is normal, and in its first days the spread is the better guide to how easy the contract will be to trade.
Around expiration, some traders watch the crowded strikes for pin risk. Put that chart beside the expected move and you can see where the heavy strikes sit compared with the range the market is pricing.
What it does not tell you
Nobody can read bullish or bearish from the count. A large open interest in a call can be buyers betting on a rise, covered call writers collecting premium on stock they own, or one side of a spread that someone else has hedged in a completely different way. Every contract has a long side and a short side. The count alone cannot tell you which side pushed for the trade, or why either of them wanted it.
Reading high open interest as a crowd forecast is the common mistake, and the second is forgetting the one-day lag and treating this morning’s figure as though it already included everything that has traded since the open.
Rising open interest during a strong price move is sometimes read as new money arriving. A fall gets read as positions being closed. Those readings are guesses about intent. They can be right. They are still guesses, and the chain gives you no way to check them. For more on options terms, the options topic page collects the related entries.
Readers also ask
Is high open interest bullish or bearish?
Neither on its own. Every open contract has a buyer and a seller, so a large number at one strike can come from speculators, hedgers, covered call writers or spread traders. It shows where positions sit and how liquid a strike is likely to be, and it gives no reliable signal about direction.
When is open interest updated?
Once a day. The number on the chain during the session reflects positions at the prior close, and the new count shows up the next morning, once clearing has finished and each trade has been sorted into opening or closing. Volume during the day can run far ahead of it.
What is a good amount of open interest for an option?
Judge it against the size you want to trade, read together with the bid-ask spread. A strike where your order would be a large share of the open contracts, or where the spread is wide relative to the premium, will be costly to exit.