In tandem with trading volume, open interest is a key indicator for figuring out the market mood. Options trading volume tells us market activity at a given moment. Specifically, it tells us if an options contract has low or high liquidity, making it easier or difficult to enter or exit positions. In turn, open interest tells us which options contracts are preferable to pick in a hectic market. Understanding both helps any trader win market battles. However, there are some important caveats to keep in mind. Shane Neagle How Does Open Interest Work in Options Trading? Inve s tmen t 50 Finance Monthly.
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