Round-Number Effects in Options Open Interest

Summary

The document addresses why nearby option strikes can show sharply different open interest. Its proposed explanation is a preference for round-number strikes: traders may concentrate positions at salient levels such as 7,400, leaving a nearby strike like 7,410 with less activity. This behavioral tendency can produce uneven distributions across otherwise similar strikes.

The response is deliberately brief and offers no analysis of the specific options chain, participant positions, or alternative explanations. Open interest is an aggregate count of outstanding contracts and does not by itself reveal whether positions are bullish, bearish, hedged, or part of multi-leg strategies. Round-number preference is therefore a plausible interpretation, not a demonstrated cause for every observed strike-level difference.

Key ideas

• Traders may favor salient round-number strikes, concentrating open interest at those levels.
• Nearby strikes can consequently have very different outstanding contract counts.
• Open interest alone does not show position direction or the strategy behind contracts.
• Round-number preference is a possible explanation, but the note does not verify it for the cited chain.

Tags

# Large Differences in Open Interest between Similar Strikes


# Large Differences in Open Interest between Similar Strikes












Consider the image attached, showing a part of the options chain for the NDX expiring July 20. What can possible explain such large differences in Open Interest across similar strikes, e.g. 818 at 7,400 and 61 for 7,410?

## Answer by Chris Taylor (score 1)

https://quant.stackexchange.com/a/40850

There's not anything to explain once you realise that people like round numbers.

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.