What is open interest in options?
Every option contract has two sides: a holder who bought it and a writer who sold it. When a new pair of positions is created, open interest rises by one contract. The contract stays open until one of three things happens: both sides close it in the market, the holder exercises it and a writer is assigned, or it expires.
Hypothetical: a stock trades at $102.50 and its $110 calls expiring next month show open interest of 6,400. That means 6,400 contracts, each normally covering 100 shares, are held by someone and owed by someone else in that one series. The $110 puts of the same expiration have their own, separate figure, and so does the $110 call of every other expiration. If calls, puts and strikes are new to you, start with options trading for beginners.
Open interest is not a count of traders or of dollars. One trader can hold 500 contracts and another just one, and a $0.05 option and a $15.00 option each count as one contract.
- Open interest (OI)
- The number of option contracts in a series that are still open at the end of a trading day: opened earlier and not yet closed, exercised, assigned or expired.
- Option series
- All contracts with the same underlying, type (call or put), strike and expiration. Open interest and volume are reported per series.
- Opening and closing trades
- A buy or sell to open creates a new position; a buy or sell to close reduces an existing one. The combination on both sides of a trade decides whether open interest changes.
How does open interest change? The four cases
Each trade has a buyer and a seller, and each of them is either opening a new position or closing an old one. Open interest depends on both sides together, as the table below shows:
- Buyer opens, seller opens: a new contract is created. Open interest +1.
- Buyer opens, seller closes: an existing holder sells to a new holder. The contract changes hands, and open interest is unchanged.
- Buyer closes, seller opens: a writer buys back a short position and a new writer takes its place. Open interest is unchanged.
- Buyer closes, seller closes: both sides exit and the contract disappears. Open interest −1.
A worked example: from today’s trades to tomorrow’s open interest
Hypothetical: the $110 calls start the day with open interest of 6,400. During the session 3,000 contracts trade. In 1,800 of them both sides are opening, in 900 an existing contract changes hands, and in 300 both sides are closing.
The next morning open interest reads 6,400 + 1,800 − 300 = 7,900, even though 3,000 contracts traded. The 900 that changed hands added to volume but not to open interest. If instead most of the day’s trades had been closing ones, open interest could have fallen on a day of heavy volume.
Exercise, assignment and expiration also remove contracts. After expiration the series no longer exists, and its open interest is gone with it; how that last day works is covered in options expiration.
Open interest vs volume: what’s the difference?
Volume counts every contract traded during the session, opening or closing, and it updates live. Open interest is a snapshot of what remains open, calculated after the close. The OCC (Options Clearing Corporation), the clearinghouse for US-listed options, processes the day’s trades, exercises and assignments overnight, and the new figure appears the next morning. During the session it does not change.
So a strike that shows volume of 8,000 and open interest of 1,200 at 2:00 p.m. is not telling you that 8,000 new contracts were opened. The 1,200 is from yesterday’s close. Today’s 8,000 could be new positions, closing trades, or the same contracts traded back and forth many times; you find out tomorrow how much of it stuck. Some data providers show open interest with a further delay, so check the date on the figure.
Read together, the two say more than either alone:
- High volume, then higher open interest the next day: new positions were added.
- High volume, then flat or lower open interest: mostly closing trades or contracts changing hands.
- Volume far larger than open interest: heavy same-day trading, common in short-dated and 0DTE options. Contracts opened and closed on the same day never appear in open interest at all.
- Low volume and low open interest: an inactive series. Expect wide spreads.
How to read open interest by strike
Many option chains and data sites can show open interest across all strikes of one expiration, as in the drawing at the top of this page: puts on one side, calls on the other, strikes down the middle. The shape tells you where positions are concentrated. In the drawing, with the hypothetical stock at $102.50, the most open calls sit at the $110 strike and the most open puts at $95.
Traders sometimes call the largest concentrations walls: a call wall above the price and a put wall below it. The idea is that heavy positioning at a strike may matter as price approaches it, partly because market makers hedging those options trade the underlying. Our gamma exposure (GEX) guide covers that reasoning and its assumptions. Treat walls as places to watch, not as support and resistance that must hold; price can move through a big strike as easily as it can stall there.
Two more cautions. Open interest piles up at round strikes and in popular expirations such as the monthly ones, so a big number may only mean the strike is popular. And near expiration the picture changes daily as contracts are closed, rolled or exercised. Some sites also calculate max pain, the price at which the open options of one expiration would be worth the least in total at expiration. It is a calculation from open interest, not a price target.
Open interest and liquidity: why low-OI strikes have wide spreads
Open interest is one of the quickest liquidity checks before you trade an option. Strikes with large open interest and steady volume tend to have more market makers quoting them and tighter bid-ask spreads. Strikes with little open interest often have wide spreads, like the illiquid quote in the drawing below, and you pay that gap when you enter and again when you exit. More on the cost in bid-ask spread.
Hypothetical: two calls on the same stock. The $105 call has open interest of 12,000 and quotes $2.40 bid, $2.45 ask: a $0.05 spread, about 2% of the price. A far-dated $140 call has open interest of 40 and quotes $0.60 bid, $0.90 ask: a $0.30 spread, about 40% of the midpoint. Buy at $0.90 and the bid is a third lower before the stock has moved at all.
Low open interest is not always a dealbreaker: a newly listed expiration starts at zero, and a strike on a busy underlying can still be quoted tightly. But the spread, not the open interest, is the cost you actually pay, so check both. Our guide on how to choose a strike price puts these checks into a list.
Does high open interest mean bullish or bearish?
Not by itself. Every open contract has a buyer and a seller, so 10,000 open calls are 10,000 long calls and 10,000 short calls at the same time. Open interest cannot tell you which side was eager, or whether the calls were bought as a bet on a rally, sold against shares as a covered call, or used as one leg of a spread.
The same goes for puts. Large put open interest can be hedging by investors who own the stock, bets on a decline, or puts sold for income by traders willing to buy the shares, as in a cash-secured put. Multi-leg trades such as an iron condor add calls and puts at once.
What open interest can show is change and concentration: positions building at a strike day after day, or a large position appearing in one expiration before an event. Pair that with price, volume and implied volatility rather than reading direction into it. Comparing put and call activity across the market is the job of the put/call ratio, which has the same blind spot.
How to use open interest before you trade
Open interest is context, not a signal, and it says nothing about timing. If you plan trades from levels on the underlying, UpTickFlow, our TradingView indicator, marks entries, stops and targets on the chart of the stock or ETF. It does not read open interest or any other options data, so the contract checks stay with you. A short routine:
- Check the date of the open interest figure, and remember it reflects the previous close.
- Look at open interest and today’s volume on the exact strike and expiration you plan to trade, not just on the underlying.
- Check the bid-ask spread as a percentage of the premium. If it is wide, use a limit order or pick a more active strike.
- Note the strikes with the largest open interest near the price in your expiration, and treat them as levels to watch, not as targets.
- Close or roll positions before expiration day if you do not want to deal with exercise and assignment.
- Size the trade so that losing the whole premium, or the full defined loss of a spread, is acceptable: any option you buy can expire worthless.