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Open interest

Open interest (OI) analysis is one of the most powerful trading tools I have found. OI is a wonderful tool that stock traders do not have, but futures traders do. What follows is an open interest primer, followed by the advanced course.

The primer

Open interest is quite simply the number of contracts outstanding. It is the total number held by buyers or (“or” not “and”) sold short by sellers on any given day. The open interest number gives you the total number of longs and the total number of shorts, because in futures, the short interest is always equal to the long interest. Each long is willing either to accept delivery of a particular commodity or to offset his contract(s) at some time prior to the expiration date. Each short is willing either to make delivery or to offset his contract(s) prior to the expiration date. With this in mind, you can plainly see that open interest is a measurement of the willingness of longs and shorts to maintain their opposing positions in the marketplace. It is a quantitative measurement of this difference of opinion.


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