Explore Your Options by Tom Gentile
What is open interest, and is it something I should be concerned about in my analysis of an option?
Open interest is the total number of options contracts for a particular strike that are “open,” both long and short. Open interest is exactly what it sounds like — interest in an option. For the retail trader, there is really no way to know simply by looking at the open interest who is on what side of a trade and whether the trade is retail or institutional. It is also difficult to determine whether a large bump in open interest was in response to a different trade, in which the purchase or sale of the contract was simply a hedge meant for insurance purposes, and will never be “closed” per se.