What is Open Interest (OI)?
Open interest (OI), refers to the number of option contracts or future contracts which are still open in the market ie., contracts which have not been settled.
What is Volume?
Volume refers to the number of trades which took place between buyers & sellers at any given time period.
Let’s assume that there are 3 options traders – Ananya, Rahul and Veer, trading in BankNifty.
The below table will explain the trading activity which happened between the 3 options traders in a given time period –
|Date||Trade Details||Volume||Open Interest|
|Aug 1||Ananya sells 5 option contracts to Rahul||5||5|
|New seller and buyer|
|Aug 2||Rahul sells 2 contracts to Veer||2||5|
|Old seller and new buyer|
|Aug 3||Veer sells his 2 contracts to Ananya||2||3|
|Old seller and buyer|