Counting Futures Open Interest When New Positions Are Opened

Summary

The document clarifies how open interest changes when futures positions are opened or closed, including a question framed around crypto exchanges. Open interest counts outstanding contracts, with each contract having both a buyer and a seller. It does not count long and short sides as separate contracts.

When one trader opens a position against another trader who closes an existing position, the transfer leaves open interest unchanged. When both sides of a trade are opening positions, the increase depends on whether those are the only market participants considered: if the two traders are the complete market, one new contract is created; if other traders take the opposite sides, the example describes an increase of two contracts. The answer is concise and gives no exchange-specific accounting details, so the core principle is contract-level counting rather than a universal statement about every exchange’s displayed data.

Key ideas

• Each open futures contract has a buyer and a seller, but open interest counts the contract once.
• A trade between an opening trader and a closing trader does not change open interest.
• When both sides open positions, the change depends on the market participants and counterparties represented in the example.
• Exchange open interest should be interpreted as a count of outstanding contracts, not separate long and short counts.

Tags

# How is Open Interest calculated?


# How is Open Interest calculated?












(More specifically on crypto exchanges)

If traderA opens 1 long and traderB closes 1 long, thus delta Open Interest is 0. Then what if traderA opens 1 long, and traderB opens 1 short, is delta Open Interest = +1 or +2?

There seems to be a bit mixed information on the web, and can't figure out the exact definition of how exchange Open Interest is calculated.

## Answer by SuavestArt (score 1, accepted)

https://quant.stackexchange.com/a/76480

Every futures contract has a buyer and a seller. Open interest just counts the number of contracts people hold. If that number equals `100`, then there are that number of buyers and sellers.

In your example, are traderA and traderB all the traders in the market? If so, they're trading the same contract and open interest increases by 1. Otherwise, there are other traders in the market (say traderC and traderD), which are taking the opposite side in those trades. In that case, open interest would increase by 2.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.