Open interest (also known as open contracts or open commitments) refers to the total number of derivative contracts, like futures and options, that have not been settled in the immediately previous time period for a specific underlying security. A large open interest indicates more activity and liquidity for the contract.
For each buyer of a futures contract there must be a seller. From the time the buyer or seller opens the contract until the counter-party closes it, that contract is considered 'open'.
Read more about Open Interest: Use of Open Interest in Technical Analysis, The Importance of Open Interest, Benefits of Monitoring Open Interest, Open Interest - A Confirming Indicator
Famous quotes containing the words open and/or interest:
“For it is not possible to join serpentine wisdom with columbine innocency, except men know exactly all the conditions of the serpent: his baseness and going upon his belly, his volubility and lubricity, his envy and sting, and the rest; that is, all forms and natures of evil: for without this, virtue lieth open and unfenced.”
—Francis Bacon (1561–1626)
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—Ralph Waldo Emerson (1803–1882)