Open interest counts how many futures or options contracts are currently open across the market. It increases when a new buyer and a new seller create a contract, and decreases when existing positions are closed against each other. Unlike volume, which counts every trade, open interest measures positions that remain live.
Because it reflects the amount of capital committed to leveraged positions, open interest is a measure of participation and potential pressure. Rising open interest means new money is entering positions; falling open interest means positions are being unwound.
Analysts often read open interest alongside price. The combination of changing price and changing open interest is used to describe whether a move is being driven by fresh positioning or by traders closing out. Open interest is descriptive of exposure, not a directional signal on its own.