Account Info
Log Out
English
Back
No matches yet
Operations too frequent. Please try again later.
Please check network settings and try again Refresh Refresh
Loading
History record delete
    Quotes All >
      News All >
        Log in to access Online Inquiry

        Reading Options Table

        Views 42822022.09.26

        Keep diving into Open Interest(OI)

        Open Interest(OI), also referred to as Open Positions, is an important measure for gauging the activity in the derivatives market.

        OI is the total number of outstanding contracts that are held by market participants at the end of each trading day.

        As opposed to stocks, which have a fixed number of shares outstanding, there's no minimum or maximum number of option contracts that can exist for any given underlying stock.

        There will simply be as many option contracts as trader demand dictates.

        Whenever you trade an option contract, you might be creating a brand-new position(Opening) or liquidating an existing one(Closing).

        That's why whenever you enter an option order, it's not good enough to simply say "buy" or "sell" as you would with a stock. You need to specify whether you are buying or selling "to open" or "to close" your position

        Practically someone needs to look at the big picture and keep track of the overall number of outstanding option contracts in the marketplace. That's where the Options Clearing Corporation(OCC) comes in.

        Every day, The OCC looks at the volume of options traded on any given stock, and they make note of how many options were market "to open" versus "to close". And once they've tallied up the numbers, they can determine the "open interest". 

        Simply put, open interest can be tallied on as large a scale as all open contracts on a stock, or can be measured more specifically as option type(call or put) at a specific strike price with a specific expiration. 

        If more of the volume on any given option is marked "to open" than "to close", open interest increases. Conversely, if more option trades are marked "to close" than "to open", open interest decreases. 

        To be noted: Although you can keep track of trading volume on any given option throughout the day, open interest is a lagging number: it's not updated during the course of a trading day. Instead, it is officially posted by The OCC the morning after any given trading session, once the figures have been calculated. For the rest of the trading day, the figure remains static. 

        Why open interest matters?

        https://courseimg.futunn.com/20220926000030823c56fd09ca2.png
        Options Table

        As you can see from the chart above, open interest can vary from the call side to the put side, and from strike price to strike price. 

        High open interest for a given option contract means a lot of people are interested in that option. However, high open interest doesn't necessarily mean the people trading that contract have the correct forecast on the stock.

        After all, for every option buyer expecting the one result, there's an option seller expecting something else to happen. So open interest doesn't necessarily indicate a bullish or bearish forecast.

        The main benefit of trading options with high open interest is that it tends to reflect greater liquidity for that contract. So there will be less of a price discrepancy between what someone wants to pay for an option and how much someone wants to sell it for.

        Thus, there should be a higher likelihood your order will be filled at a price that's acceptable to you.

        Trade like a pro with moomoo

        Get free stock and start your professional trading today

        Terms and conditions apply right-arrow

        This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.

        Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

        In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

        In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

        In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites https://www.futuau.com and https://www.moomoo.com/au. Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.

        Recommended