Open Interest vs Trading Volume in Options trading- Very important
Open Interest
If a buyer and seller come together and initiate a new position of one contract, then open interest will increase by one contract. Should a buyer and seller both exit a one contract position on a trade, then open interest decreases by one contract. However, if a buyer or seller passes off their current position to a new buyer or seller, then open interest remains unchanged.
Open interest is just the contracts that are created(buy of 1 lot and sell of 1 lot will give 1 Open interest) are created. If an options contract exists, it must have had a buyer and also for every buyer, there must be a seller since you … Read the rest