The open interest of an option is the total number of outstanding option contracts for a particular strike price and expiration date which have not been settled. Open interest increases anytime an option is bought or sold to open a position, whereas a closing transaction will decrease open interest. Open interest is calculated at the end of each business day by the OCC (Options Clearing Corporation).
Open interest is one gauge for the level of trading activity in an option. Paired with option volume, it can help to give a more complete picture of how liquid the contract is or how active the trading is in a particular option contract.
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