Open interest vs volume: follow two different ledgers

Options volume counts contracts traded during a stated interval. Open interest (OI) counts outstanding contracts at a report’s cutoff. Count a contract once, not once for the buyer and again for the seller.

A tape can update during the session while displayed OI still refers to a prior cleared report. Comparing today’s volume with that OI does not reveal today’s final outstanding positions. Always retain the dates and the contract identity.

In this simplified trade-only ledger, both sides opening a new 10-contract position adds 10 to OI and 10 to volume. Both sides closing 10 contracts subtracts 10 from OI but still adds 10 to volume. One side opening while the other closes transfers an existing position: volume rises by 10 and OI is unchanged.

The ledger assumes opening/closing designations are known. A normal trade print generally does not provide all that information. Exercise, expiry, clearing adjustments and other lifecycle events can also change actual reported OI.

Start with 100 outstanding contracts in one hypothetical series. Both sides open 80, both sides close 40, then 70 contracts transfer between an opening and a closing participant.

Session volume is 80 + 40 + 70 = 190. Modeled ending OI is 100 + 80 − 40 + 0 = 140. Volume exceeds the starting OI, yet the net increase in outstanding contracts is only 40. The same contract exposure can change hands repeatedly.

This example supplies the position designations so that the arithmetic can be checked. You cannot reconstruct those designations from the volume total alone.

Compare reports for the same underlying, option type, strike, expiry and deliverable. Record the earlier and later cutoffs; if either report is absent, preserve the missing value. A difference across different series or reversed report dates is not a valid OI change.

High volume relative to prior OI can identify activity worth inspecting. It does not independently establish new institutional buying, bullish intent or a profitable trade. Inspect executions and broader strategy context before forming that interpretation.