What is open interest?
How many contracts are still being held rather than already closed out. Where it piles up tends to act like a magnet on the price as expiry approaches.
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Open interest, in full.
Volume counts how many contracts changed hands today. Open interest counts how many are still open — positions somebody is holding overnight rather than trading in and out of.
The two together say something neither says alone. Volume far above open interest means today's trading is new positioning rather than people closing out what they already had.
Where open interest concentrates matters near expiry. A lot of contracts resting at one price gives the people on the other side of them a financial reason to defend it, which is why prices often drift toward those levels as the date approaches.
It shows where the crowd is actually positioned, and which prices have real money riding on them rather than a line somebody drew on a chart.
Words that go with it.
See it happening.
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