What does volume and open interest mean in options ?

Volume and open interest (OI), measure traders' interest in a specific option. This is used by traders to determine the liquidity of an option. Options with low volume or open interest will have fewer buyers and sellers, and therefore low liquidity.

Volume-It's the total amount of options contracts that were traded between buyers or sellers. It is calculated daily. Let's say, for example, that a buyer purchases 10 options and a seller has 10 options. The volume for the day will therefore be 10.

Open Interest- It is the total number or contracts held by traders. Excludes expired and exercised contracts. Let's say that 3 traders hold 10 contracts. The open interest for the day would then be 30.

How do you find the OI and volume of an option?

By reading the options chain, you can find out the volume and open interest of the selected Option. To search for the desired option, go to www.nseindia.com. Click on the options link to go to the page for the particular options.

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