What is Open Interest?
Open interest is the total number of derivative contracts, such as futures or options, that have been opened and not yet closed or settled.
How it works
It rises when new positions are opened and falls when positions are closed. Traders read it next to price: price and open interest rising together suggests new money entering the move, while price rising as open interest falls suggests shorts closing rather than new buyers.
What it can't tell you
Open interest counts contracts, not who is long or short, and every contract has one of each, so it cannot tell you which side is winning.
Does it work as a strategy?
Tickfloor backtested 3 rules that use open interest, net of modelled trading costs, against a benchmark of the same assets. None finished ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use open interest, and a historical diagnostic, not validation under Testing Standard v2.
Tickfloor's research desk has backtested 517 strategies, most against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs). After correcting for the 598 tests run (Benjamini-Hochberg), 0 passed. That does not prove no strategy works. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Common questions
What is Open Interest?
Open interest is the total number of derivative contracts, such as futures or options, that have been opened and not yet closed or settled.
How does Open Interest work?
It rises when new positions are opened and falls when positions are closed. Traders read it next to price: price and open interest rising together suggests new money entering the move, while price rising as open interest falls suggests shorts closing rather than new buyers.
Does Open Interest work as a strategy?
Tickfloor backtested 3 rules that use open interest, net of modelled trading costs, against a benchmark of the same assets. None finished ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use open interest, and a historical diagnostic, not validation under Testing Standard v2.
What are the limits of Open Interest?
Open interest counts contracts, not who is long or short, and every contract has one of each, so it cannot tell you which side is winning.