Open Interest (OI) Part 2 - Option Data बताएगा मार्किट के राज़

Open Interest is the total number of options contracts on an underlyer that have not yet been closed i.e. they have not been exercised, expired or squared off. It is applicable for all derivative contracts be it Futures or Options. Different people view it in different manner. Generalizing it may not be a good idea. Open interest is commonly interpreted as following:
* Rise or fall in the open interest may be interpreted as an indicator of the future expectations of the market. A rising open interest number indicates that the present trend is likely to continue. If the open interest number is stagnant, then it may suggest that the market is in a cautious mode.
* If Open interest starts declining, then the market suggests a trend reversal mood. In a rising market, continuous decline of open interest indicates an expectation of downward movement. Similarly, in a falling market, the decline of open interest indicates that the market expects an upward trend.
Volume is the number of contracts of a particular option contract that have traded on a given day, similar to it meaning the number of shares traded on a particular stock on a given day. Open interest is the number of option contracts for a particular stock at a specific strike price and a specific expiration date that were open at the close of trading on the prior trading day. While some traders look at this information as an indication of liquidity of a particular option or option chain, a more reliable indicator may be the tightness of the bid / ask spread. A common misconception is that open interest is the same thing as volume of options and futures trades. This is not correct. In this video, using real data we have explained Open Interest can be used to find out the stock trend build positions.
If you have any doubts about this topic or any topic related to call or Put option or options trading in general please feel free to post your queries.
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Видео Open Interest (OI) Part 2 - Option Data बताएगा मार्किट के राज़ канала BullTrack RT