Definition of 'Open Interest'
1. The total number of options and/or futures contracts that are not closed or delivered on a particular day.
2. The number of buy market orders before the stock market opens.
Investopedia explains 'Open Interest'
1. A common misconception is that open interest is the same thing as volume of options and futures trades. This is not correct, as demonstrated in the following example:
-On January 1, A buys an option, which leaves an open interest and also creates trading volume of 1.
-On January 2, C and D create trading volume of 5 and there are also five more options left open.
-On January 3, A takes an offsetting position, open interest is reduced by 1 and trading volume is 1.
-On January 4, E simply replaces C and open interest does not change, trading volume increases by 5.