If there is a considerable amount
of open interest in put contracts, investors think the stock will fall at some point.
Here we explain what level II is, how it works and how it can help you better understand
open interest in a given stock.
By opening your interest rate to the possibility of adjustment, you open yourself to the risk of your mortgage rate increasing and your monthly mortgage payments becoming unsustainable.
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The analysis then looked for stocks with
options open interest of more than 20,000, an indication shares could move significantly after reporting earnings.
Rising
open interest indicates that either the existing market participants are holding larger positions, or new participants are coming into the market, or a mixture of the two.
Specifically, the ratio of call to
put open interest and volume is substantially higher for low - priced stocks than it is for high - priced stocks.
If one person sells 5 contracts and someone else buys 5 contracts
then open interest is 5, meaning that there are 5 such contracts in existence.
An empty chart will be shown for products with weekly options and no
current open interest while an empty message will show for products with no current weekly option offering.
In effect,
open interest measures the depth of the market rather than the amount of trading activity, but it can be used as an indicator of future trading activity.
Over 16,000 contracts have traded on the day... making it the
largest open interest strike in near term options by a wide margin.
It's impossible to determine how daily volume will
affect open interest until the next day, because you don't know whether the trades are opening or closing positions.
Better to stick with option series that have 1000 or more contracts (
i.e. open interest), and stocks that trade 500,000 shares or more per day.
On the other hand, the rise in the ratio
of open interest to eligible gold is unprecedented.
So, are you saying that as supply usage imbalance increases, the trend following programs direction is really determined
by open interest?
If you want more liquidity and tighter bid - ask spreads then
more open interest is better.
Trading data shows
open interest for Brent put options to sell at $ 70, $ 69 and $ 68 per barrel has surged since the middle of last week on the Intercontinental Exchange (ICE).
We measure
open interest at the end of the month, and when comparing one year to another, we use the end - of - December numbers.
Increasing open interest indicates new capital inflow and, hence, sustainability of the existing trend, while declining OI indicates a weakening trend.
The only difference when screening for weeklys vs monthlies is that we remove the
Minimum Open Interest filter when scanning weeklys.
A
high open interest tends to correlate with a bearish COT structure — i.e. a high commercial bank net short — and a low relative o / i correlates with a cyclical low - point in gold.
When open interest collapses, then insurance is expensive to producers, so they may forego production since producing and storing is risky without insurance.
As of midday Friday, the six Amazon options with the
most open interest — defined as outstanding contracts trading at once — were all calls.
Since the failure of MF Global in 2011, COMEX
gold open interest dropped from a peak of 650,000 contracts to a range of 370,000 to 450,000.
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Short Sterling — June 2010 Comment:
Rising open interest in most contracts suggests extreme caution as the money market is still dysfunctional.
The ratio of
COMEX open interest to total gold warehoused has held fairly steady, rising from 5.6 x in 2011 to 6.1 currently.
They trade on margin, and they trade thinly - traded option series (
low open interest makes for wide bid - ask spreads and makes it costlier to do adjustments to the position should the need arise).
Year -
over-year open interest in February and January also rose, by nearly 23 percent and 19 percent, respectively.
Since 2008, the year -
end open interest on exchanges in Asia - Pacific has more than doubled.
Nothing has been able to spark buying, yesterday's option expiration, one in which there was
massive open interest on puts did not worry those who were exercised into short futures to buy to cover.
He said the liquidation is apparent in the gold futures market,
where open interest in November was 450,000 but is now 395,000.