Answer Posted / kalyani
1. The total number of options and/or futures contracts
that are not closed or delivered on a particular day.
2. The number of buy market orders before the stock market
opens.
1. A common misconception is that open interest is the same
thing as volume of options and futures trades. This is not
correct as demonstrated in the following example:
On Jan 1, A buys an option, which leaves an open interest
and also creates trading volume of 1.
On Jan 2, C and D create trading volume of 5 and there are
also 5 more options left open.
On Jan 3, A takes an offsetting position and therefore open
interest is reduced by 1, and trading volume is 1.
On Jan 4, E simply replaces C and therefore open interest
does not change, trading volume increases by 5.
| Is This Answer Correct ? | 5 Yes | 1 No |
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