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What is open interest in options, in plain words?

Open interest is the total number of outstanding option contracts on a given series, or for a given underlying stock 1: contracts that are still open, not yet exercised, closed or expired 2. An opening transaction increases that option's open interest 1; a closing transaction reduces it 3. Volume, shown beside it in an option chain, counts how many contracts traded in a period, such as today 2.

A made-up contract with 1,000 open at the start of the day. Choose what the buyer and the seller of one trade are doing, record the trade, and watch the two counts (open interest as it will stand once the day is counted).

Source: the rules of opening and closing transactions as the OIC glossary states them 1 3, applied to a made-up contract starting at 1,000 open; not market data. For learning; not advice.

One trade, three outcomes

Every trade has a buyer and a seller, and each is either opening a position or closing one. When both open, a new contract exists: open interest rises by one 1. When both close, a contract is gone: it falls by one 3. When one opens and the other closes, the contract passes from one holder to another and the count stays where it was. Volume rises by one every time 2.

Reading the two together

Open interest is not counted trade by trade: the OCC works it out from the day's opening and closing transactions and posts it the next morning, so during a session a chain shows the previous day's figure 4. A row with high open interest has many contracts outstanding 1; a row with high volume traded a lot today 2. Each is a count of contracts, not a price and not a direction, and neither comes from the formula.

What this shows, and what it doesn't

The arithmetic of the counts, on made-up numbers. A real chain shows both figures for every strike, beside the bid and the ask 2; look at your broker's chain to see where they sit for a real contract.

Go further

How do you read an option chain? →Where volume and open interest sit.Why am I down as soon as I buy an option? →The spread between bid and ask.
Sources (4), checked 27 October 2026 and 28 October 2026
  1. The Options Industry Council, “Options Glossary”, entries under O. Read it (read 28 October 2026)
  2. Moomoo, “Options Chains: Definition, How to Read and Analyze Them”. Read it (read 27 October 2026)
  3. The Options Industry Council, “Options Glossary”, entries under C. Read it (read 28 October 2026)
  4. The Options Playbook, “Keeping Tabs on Open Interest”. Read it (read 28 October 2026)

Now try it on a scenario of your own

Pick where a simulated stock might be, and by when: drag one dot and see, side by side, what buying shares, one option, or a pair of options (a call or put spread) would each do. Free, no sign-up.

Check a trade before you make it →