derivative contracts

Open interest are also referred to as open contracts or open commitments. The total number of derivative contracts are denoted by them, like futures and options, that are currently active on a specific underlying security. The flow of money into the futures market is measured by open interest. There must be a buyer of that contract for each seller of a futures contract. Thus a seller and a buyer are joined  to create only one contract. Therefore, we need only to know the totals from one side or the other, buyers or sellers, not the sum of both in order to determine the total open interest for any given market.

The increase or decrease in the number of contracts for that day is represented by the change in open interest that is reported each day, and it is shown as a positive or negative number.

Example of Open Interest

For the IBM call option that hit 90 and expiring in January 2007, on February 10, 2006 the total open interest on  was 10251.

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