What is Open Interest and Volume and how do they differ in Stock Market

What is Open Interest and Volume and how do they differ in Stock Market

• An open interest is the total number of contracts outstanding (yet to be settled) for an underlying asset. The quotes given above show us on August 9, 2010 Nifty futures has an open Interest of 32062850. It is important to understand that number of long futures as well as number of short futures is 32062850. This is because total number of long futures will always be equal to total number of short futures. Only one side of contracts is considered while calculating/ mentioning open interest. On August 8, 2010, the open interest in Nifty futures was 30959200. This means that there is an increase of 1103650 in the open interest on August 9, 2010. The level of open interest indicates depth in the market. 

• Volumes traded give us an idea about the market activity with regards to specific contract over a given period – volume over a day, over a week or month or over entire life of the contract.