Groww Logo

Stuck Somewhere?

My Tickets
Stocks
Mutual Funds
Payments
My Account
FDs
US Stocks
Gold
Demat Account
Investments
Futures & Options
IPO
SGB
Margin
Charges
Corporate Action
P&L Reports
Others

What is open interest (OI) and volume? How do they help in measuring liquidity?

Open interest (OI) is the total number of contracts held by traders. Open interest excludes exercised and expired contracts. For example, if on a certain day, 3 traders are holding 10 lots of contracts, then the open interest for that day would be 30.

Volume is the total number of options traded between buyers and sellers each day. In the options segment, for every buyer, there is a seller. So, if on a certain day, a buyer buys 10 lots of an option from a seller, then the volume of that option for the day will be 10.

The liquidity of an option is determined using open interest (OI) and volume. These metrics help measure the activity and interest of traders in a given option. Therefore, options with low volume and open interest will have fewer buyers and sellers, and therefore, lesser liquidity.

CONTACT US
We hope that this answer was helpful!
How was your experience?
ⓒ 2016-2022 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 3.1.1
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  ICICI PRUDENTIAL |  HDFC |  NIPPON INDIA |  ADITYA BIRLA SUN LIFE |  SBI |  UTI |  FRANKLIN TEMPLETON |  KOTAK MAHINDRA |  IDFC |  DSP |  AXIS |  TATA |  L&T |  SUNDARAM |  PGIM |  INVESCO |  LIC |  JM FINANCIAL |  BARODA PIONEER |  CANARA ROBECO |  HSBC |  IDBI |  INDIABULLS |  MOTILAL OSWAL |  BNP PARIBAS |  MIRAE ASSET |  PRINCIPAL |  BOI AXA |  UNION KBC |  TAURUS |  EDELWEISS |  NAVI |  MAHINDRA |  QUANTUM |  PPFAS |  IIFL |  Quant |  SHRIRAM |  SAHARA |  ITI