Let’s break it down together in this thread! 
Open Interest is the total number of unfulfilled derivative contracts for an asset, like options or futures. Think of it as the number of bets still on the table that haven’t been settled.
Open interest gives us insights into the market’s activity and liquidity. When more contracts are open, it indicates heightened interest and potential for more trading action.
How does Open Interest change? Well, when traders open new positions, it increases. For instance, let’s say 10 option contracts are bought today. Tomorrow, if 5 contracts are closed and 10 more are opened, the open interest increases by 5.
But don’t confuse Open Interest with Trading Volume! While Open Interest tracks the total number of contracts, Trading Volume counts the number of contracts traded in a day. They measure different aspects of market activity.
Why is Open Interest important? High open interest generally means higher liquidity for a contract, making it easier to buy or sell. It indicates market participants are closely watching that market.
Rising Open Interest usually indicates new buying, a bullish trend. But if it gets too high, it might signal a trend reversal. Decreasing Open Interest suggests traders are leaving, possibly signaling the end of a trend.
How to find Open Interest? Look for changes at the end of each trading day. Rising Open Interest suggests continued trend, while decreasing suggests trend reversal. It’s like peeking into the future of market sentiment!
Example: If Open Interest for a stock option goes up, it means more traders are betting on that option. But if it goes down, it signals fewer traders are interested, possibly indicating a shift in market sentiment.
Remember, Open Interest isn’t a crystal ball, but it’s a valuable tool for understanding market dynamics. It helps traders gauge investor sentiment and potential future market movements.
Don’t miss out on valuable insights for your market analysis! Keep an eye on Open Interest—it reveals where smart money is flowing and where the market might be headed.
Gain deeper insights into market dynamics by watching our YouTube video on Open Interest trading strategy.
Learn how this metric predicts price movements and offers valuable insights into market sentiment, along with the innovative Dhan Open Interest Indicator for effective analysis. Don’t wait, watch now on our YouTube channel! 
Happy trading!