Open Interest (OI)

Open Interest (OI) is the total number of outstanding derivative contracts (futures or options) that have not been settled. It represents the total number of open positions in the market. Unlike trading volume, which counts all contracts traded in a period, OI only counts contracts that remain open.

OI increases when a new buyer AND a new seller enter the market (new position created)
OI decreases when an existing buyer AND seller close their positions
OI stays the same when an existing holder transfers to a new holder

OI Change % measures the percentage change in OI over a lookback period:

OI_Change = ((Current_OI - OI_N_periods_ago) / OI_N_periods_ago) * 100

• Market participation gauge — rising OI indicates increasing market interest and new money flowing in
• Trend strength indicator — OI rising with price confirms the trend; OI falling suggests the trend may weaken
• No fixed range — OI value depends on the market and contract specifications
• Available for crypto futures — provided by exchanges like Bybit for perpetual contracts

Trend confirmation

• Rising price + Rising OI — strong uptrend, new longs entering
• Falling price + Rising OI — strong downtrend, new shorts entering
• Rising price + Falling OI — weak rally, short covering (not new buying)
• Falling price + Falling OI — weak decline, long liquidation (not new selling)

Reversal signals

• Extremely high OI — market is overcrowded, potential for a squeeze
• Sharp OI drop — mass position closing, potential trend exhaustion
• OI divergence — OI declining while price continues trending suggests weakening momentum

| Indicator | Default Period | Description | |-----------|---------------|-------------| | OpenInterest | — | Raw open interest value | | OI_Change(24) | 24 | OI change % over N periods |

| Condition | Meaning | |-----------|---------| | OpenInterest > 50000 | OI exceeds threshold — high market participation | | OI_Change(24) > 5 | OI grew more than 5% over 24 periods — strong new interest | | OI_Change(24) < -10 | OI dropped more than 10% — mass position closing | | OpenInterest cross_over SMA(20) | OI crosses above its moving average — accelerating interest |

• Combine OI with price action for trend confirmation — the strongest trends have both rising price and rising OI
• Watch for OI divergence: if price makes new highs but OI declines, the rally may be running out of steam
• Sudden OI spikes can precede large moves — they indicate significant new position building
• OI Change % is more useful than raw OI for comparing across different time periods