Open interest counts positions, not trades. When a new buyer and a new seller open a contract between them, open interest rises by one; when either side closes, it falls. This makes it a measure of how much capital is committed to the derivatives market at any moment, rather than how much has changed hands.
Read alongside price, it separates two very different moves. Price rising with open interest rising means new money is opening longs. Price rising while open interest falls means shorts are closing — a squeeze, driven by positions being covered rather than by fresh demand. Rapid growth in open interest is also what builds the conditions for a liquidation cascade.
What does rising open interest tell you?
That new positions are being opened rather than existing ones closed. Combined with the price direction it distinguishes genuine new positioning from a squeeze of the opposite side.
Last updated October 17, 2026