Lesson 2 of 6 · Reading the Tape
Volume vs. open interest
Volume counts today's activity.
Volume is the number of contracts that changed hands today at a given strike. It resets to zero at every open. A high-volume print means a lot of trading happened at that contract today, nothing more.
Open interest counts everything still live.
Open interest is the total number of contracts outstanding at a strike. It updates the morning after trading, not in real time. When today's volume exceeds yesterday's open interest at the same strike, new contracts were created. Existing holders did not simply pass positions between themselves.
When volume clears open interest.
The gold bar at strike 110 sits above the steel open interest bar. More contracts traded today than existed yesterday. That is fresh money entering, not rotation among existing holders.
This one is an animated diagram in the app. See it in Vero.
A strike shows 12,000 contracts of volume today. Yesterday's open interest was 8,000. What does that imply?
Show the answer
A. New contracts were opened today. Volume above prior open interest means more contracts traded today than existed before the session. Fresh positions were opened.