I couldn’t understand  the real concept of OI, plz help me
For example,
Jan 1st Friday, the fresh contract for this month opens,
Day 1-A buys 10,000(10 lot) @ 100 and B sells 2,000(2 lot) @ 90 =OI??
Day 2-C buys 4,000(4 lot) @ 105 and D sells 1,000(1 lot) @ 110  =OI?
All four created a new contract and waiting for their target to square off, if last thurday LTP-160, B,C and D squared off with prof/loss, but A placed sell order @160(10 lot), no one ready to buy , what happens??
1 Comment
  1. EQSIS 7 years ago

    Hi,

    Lets understand some basics before we get into the details of Open Interest.

    1. For any trade to take place we need one buyer and another seller. Lets say, If we see 1000 Buyers and 500 Sellers. Then Trade will be only for 500, because Remaining 500 Buyers may not find sellers to buy shares.
    2. The Traded Price is a price which got agreed by both buyer and seller. So buyer price cannot be different for seller price in any particular trade.
    3. Open Interest is nothing but “Number of Open Positions”. The Derivative contracts can be opened / transferred / closed. So the Open Interest can increase / remain same / decrease as per the scenario.

    I see your question has some fundamental error.

    Needless to worry about settlement process. Exchange will ensure the settlement process.

    About Open Interest

    1. An open interest increases when there is new deal of buying and selling takes place
    along with the increasing volume.
    2. An open interest decreases when the existing contract is closed by both the parties
    with decreasing volume
    3. An open interest remains same and constant when the contact is transferred to the new
    party entering into contract but with change in volume.

    Happy Trading

Leave a reply

©2024 | Rights Reserved | EQSIS | Terms and ConditionsPrivacy Policy

CONTACT US

We're not around right now. But you can send us an email and we'll get back to you, asap.

Sending

Log in with your credentials

Forgot your details?