A note: Open interest in $STRK 15-minute contracts rose 2.9%, with the value of open positions at about $31.79 million; the price increased 3.11% over the same period.
People often ask how to interpret open interest. Here’s my take.
Open interest is not a measure of fund flows: an increase only means that more positions are being held in futures contracts. It can’t tell you whose money is involved or which direction they’re betting on.
The higher open interest gets, the greater the impact futures positions can have on prices. A sudden spike or drop can trigger a cascade of liquidations.
Cross-checking several indicators is more reliable than looking at just one, but even a whole range of indicators can’t provide a definitive conclusion.
People often ask how to interpret open interest. Here’s my take.
Open interest is not a measure of fund flows: an increase only means that more positions are being held in futures contracts. It can’t tell you whose money is involved or which direction they’re betting on.
The higher open interest gets, the greater the impact futures positions can have on prices. A sudden spike or drop can trigger a cascade of liquidations.
Cross-checking several indicators is more reliable than looking at just one, but even a whole range of indicators can’t provide a definitive conclusion.