Mfcttrf

Is the name of an interval between two notes unique and absolute?

My passport was stamped with an exit stamp while transiting to another Schengen country via Turkey. Was this a mistake?

Could the Orion project pusher plate model be used for asteroid deflection?

Can I separate garlic into cloves for storage?

Why do things cool off?

EU compensation - fire alarm at the Flight Crew's hotel

Tips for remembering the order of parameters for ln?

Hobby function generators

Where did Otto von Bismarck say "lying awake all night, hating"?

What's the benefit of prohibiting the use of techniques/language constructs that have not been taught?

How could artificial intelligence harm us?

How can I create folders in folders in terminal

Simple way to decompose a lists in a certain way?

What is the origin of the "being immortal sucks" trope?

How to convey to the people around me that I want to disengage myself from constant giving?

Whence comes increasing usage of "do" for "have" in ordering food?

Can a business put whatever they want into a contract?

Does Mage Hand give away the caster's position?

Is Yang not precluded from conducting his "UBI experiment" as an electoral candidate?

Is this adjustment to the Lucky feat underpowered?

MySQL - How to check for a value in all columns

Are lay articles good enough to be the main source of information for PhD research?

Is it safe to put a microwave in a walk-in closet?

Can one guy with a duplicator trigger a nuclear apocalypse?

When would open interest equal trading volume?

Yield on Fixed income futureschanges in open interest vs changes in underlying volumeCost of rolling futures contractsInterpretation of Open Interest for OptionsFilter options used in the construction of implied volatility surface

.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty,.everyoneloves__bot-mid-leaderboard:empty margin-bottom:0;

3

$begingroup$

I know the difference between open interest and trading volume. Open interest is the number of contracts, long or short, outstanding. Trading volume is the number of contracts traded in a day.

However, I am struggling to understand this concept intuitively. When would open interest equal trading volume and when would it differ?

options finance futures derivatives

share|improve this question

asked 8 hours ago

Mr.RloverMr.Rlover

1833 bronze badges

New contributor

Mr.Rlover is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

$endgroup$

add a comment
 | 

3

$begingroup$

I know the difference between open interest and trading volume. Open interest is the number of contracts, long or short, outstanding. Trading volume is the number of contracts traded in a day.

However, I am struggling to understand this concept intuitively. When would open interest equal trading volume and when would it differ?

options finance futures derivatives

share|improve this question

asked 8 hours ago

Mr.RloverMr.Rlover

1833 bronze badges

New contributor

Mr.Rlover is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

$endgroup$

add a comment
 | 

$begingroup$

I know the difference between open interest and trading volume. Open interest is the number of contracts, long or short, outstanding. Trading volume is the number of contracts traded in a day.

However, I am struggling to understand this concept intuitively. When would open interest equal trading volume and when would it differ?

options finance futures derivatives

share|improve this question

asked 8 hours ago

Mr.RloverMr.Rlover

1833 bronze badges

New contributor

Mr.Rlover is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

$endgroup$

share|improve this question

asked 8 hours ago

Mr.RloverMr.Rlover

1833 bronze badges

New contributor

Mr.Rlover is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

share|improve this question

asked 8 hours ago

Mr.RloverMr.Rlover

1833 bronze badges

New contributor

Mr.Rlover is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

asked 8 hours ago

Mr.RloverMr.Rlover

1833 bronze badges

New contributor

Mr.Rlover is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

asked 8 hours ago

Mr.RloverMr.Rlover

1833 bronze badges

1 Answer
1

active

oldest

votes

3

$begingroup$

Futures are in "zero net supply", or "for every long there is a short", which means that at any time there are investors who are long a certain number of contracts and other investors who are short an (exactly matching!) number of contracts. This number is called the Open Interest. It starts at zero when the exchange introduces a new contract (like Sep 2019 Gold a few years ago), increases over time, and then goes back to zero by the expiration date (September 2019), after which the contract no longer exists.

When you buy a contract, you can buy an "already existing" contract from an investor who is long (in which case there is one trade and no change in OI), or you might buy it from a "writer" who does not have a contract but creates one by selling short to you. In the second case there is one trade and also an increase in Open Interest by 1 unit. Of course you don't know, when you are buying, who is on the other side and whether they have a position or not, so you can't tell the difference. But the OI can be computed by the exchange based on its information from all the clearing firms (one of whom, of course holds you account).

OI decreases when someone who is long sells to someone who is already short. In this case both parties have terminated their positions. OI also decreases at expiration when someone who is short delivers the underlying to someone who is long, closing out their obligations to each other.

share|improve this answer

edited 8 hours ago

answered 8 hours ago

Alex CAlex C

7,35411 gold badge1313 silver badges2626 bronze badges

$endgroup$

• 
  
  
  

  
  

  
  
  
  
  
  

  
  $begingroup$
  Makes perfect sense, thank you.
  $endgroup$
  – Mr.Rlover
  8 hours ago
  

  
  
  
  

add a comment
 | 

Your Answer

StackExchange.ready(function()
var channelOptions =
tags: "".split(" "),
id: "204"
;
initTagRenderer("".split(" "), "".split(" "), channelOptions);

StackExchange.using("externalEditor", function()
// Have to fire editor after snippets, if snippets enabled
if (StackExchange.settings.snippets.snippetsEnabled)
StackExchange.using("snippets", function()
createEditor();
);

else
createEditor();

);

function createEditor()
StackExchange.prepareEditor(
heartbeatType: 'answer',
autoActivateHeartbeat: false,
convertImagesToLinks: false,
noModals: true,
showLowRepImageUploadWarning: true,
reputationToPostImages: null,
bindNavPrevention: true,
postfix: "",
imageUploader:
brandingHtml: "Powered by u003ca class="icon-imgur-white" href="https://imgur.com/"u003eu003c/au003e",
contentPolicyHtml: "User contributions licensed under u003ca href="https://creativecommons.org/licenses/by-sa/4.0/"u003ecc by-sa 4.0 with attribution requiredu003c/au003e u003ca href="https://stackoverflow.com/legal/content-policy"u003e(content policy)u003c/au003e",
allowUrls: true
,
noCode: true, onDemand: true,
discardSelector: ".discard-answer"
,immediatelyShowMarkdownHelp:true
);



);

Mr.Rlover is a new contributor. Be nice, and check out our Code of Conduct.

draft saved

draft discarded

Sign up or log in

StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);

Sign up using Google

Sign up using Facebook

Sign up using Email and Password

Post as a guest

Name

Email

Required, but never shown

StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fquant.stackexchange.com%2fquestions%2f48711%2fwhen-would-open-interest-equal-trading-volume%23new-answer', 'question_page');

);

Post as a guest

Name

Email

Required, but never shown

3

$begingroup$

Futures are in "zero net supply", or "for every long there is a short", which means that at any time there are investors who are long a certain number of contracts and other investors who are short an (exactly matching!) number of contracts. This number is called the Open Interest. It starts at zero when the exchange introduces a new contract (like Sep 2019 Gold a few years ago), increases over time, and then goes back to zero by the expiration date (September 2019), after which the contract no longer exists.

When you buy a contract, you can buy an "already existing" contract from an investor who is long (in which case there is one trade and no change in OI), or you might buy it from a "writer" who does not have a contract but creates one by selling short to you. In the second case there is one trade and also an increase in Open Interest by 1 unit. Of course you don't know, when you are buying, who is on the other side and whether they have a position or not, so you can't tell the difference. But the OI can be computed by the exchange based on its information from all the clearing firms (one of whom, of course holds you account).

OI decreases when someone who is long sells to someone who is already short. In this case both parties have terminated their positions. OI also decreases at expiration when someone who is short delivers the underlying to someone who is long, closing out their obligations to each other.

share|improve this answer

edited 8 hours ago

answered 8 hours ago

Alex CAlex C

7,35411 gold badge1313 silver badges2626 bronze badges

$endgroup$

• 
  
  
  

  
  

  
  
  
  
  
  

  
  $begingroup$
  Makes perfect sense, thank you.
  $endgroup$
  – Mr.Rlover
  8 hours ago
  

  
  
  
  

add a comment
 | 

3

$begingroup$

Futures are in "zero net supply", or "for every long there is a short", which means that at any time there are investors who are long a certain number of contracts and other investors who are short an (exactly matching!) number of contracts. This number is called the Open Interest. It starts at zero when the exchange introduces a new contract (like Sep 2019 Gold a few years ago), increases over time, and then goes back to zero by the expiration date (September 2019), after which the contract no longer exists.

When you buy a contract, you can buy an "already existing" contract from an investor who is long (in which case there is one trade and no change in OI), or you might buy it from a "writer" who does not have a contract but creates one by selling short to you. In the second case there is one trade and also an increase in Open Interest by 1 unit. Of course you don't know, when you are buying, who is on the other side and whether they have a position or not, so you can't tell the difference. But the OI can be computed by the exchange based on its information from all the clearing firms (one of whom, of course holds you account).

OI decreases when someone who is long sells to someone who is already short. In this case both parties have terminated their positions. OI also decreases at expiration when someone who is short delivers the underlying to someone who is long, closing out their obligations to each other.

share|improve this answer

edited 8 hours ago

answered 8 hours ago

Alex CAlex C

7,35411 gold badge1313 silver badges2626 bronze badges

$endgroup$

• 
  
  
  

  
  

  
  
  
  
  
  

  
  $begingroup$
  Makes perfect sense, thank you.
  $endgroup$
  – Mr.Rlover
  8 hours ago
  

  
  
  
  

add a comment
 | 

$begingroup$

Futures are in "zero net supply", or "for every long there is a short", which means that at any time there are investors who are long a certain number of contracts and other investors who are short an (exactly matching!) number of contracts. This number is called the Open Interest. It starts at zero when the exchange introduces a new contract (like Sep 2019 Gold a few years ago), increases over time, and then goes back to zero by the expiration date (September 2019), after which the contract no longer exists.

When you buy a contract, you can buy an "already existing" contract from an investor who is long (in which case there is one trade and no change in OI), or you might buy it from a "writer" who does not have a contract but creates one by selling short to you. In the second case there is one trade and also an increase in Open Interest by 1 unit. Of course you don't know, when you are buying, who is on the other side and whether they have a position or not, so you can't tell the difference. But the OI can be computed by the exchange based on its information from all the clearing firms (one of whom, of course holds you account).

OI decreases when someone who is long sells to someone who is already short. In this case both parties have terminated their positions. OI also decreases at expiration when someone who is short delivers the underlying to someone who is long, closing out their obligations to each other.

share|improve this answer

edited 8 hours ago

answered 8 hours ago

Alex CAlex C

7,35411 gold badge1313 silver badges2626 bronze badges

$endgroup$

share|improve this answer

edited 8 hours ago

answered 8 hours ago

Alex CAlex C

7,35411 gold badge1313 silver badges2626 bronze badges

answered 8 hours ago

Alex CAlex C

7,35411 gold badge1313 silver badges2626 bronze badges

answered 8 hours ago

Alex CAlex C

7,35411 gold badge1313 silver badges2626 bronze badges