Concept of Open Interest Futures

Futures and are derived assets or derivatives. In classical interpretation, these are contracts that give the right to supply a basic asset at a pre-agreed price after a certain period of time, providing for partial (collateral) payment of the value of the volume. 

 

Futures owe their appearance to Sellers and Buyers of agricultural products. In the mid-19th century, deals were thus made for the future harvest, allowing producers to record the value of the goods in advance. 

 

The buyer also benefited from buying futures, at the end of the term he received either a harvest or a refund of funds recalculated at the current rate at the time of calculation. Considering that the failure of delivery could only be due to crop failure, at which the price of agricultural products increased, the Manufacturer had to compensate for the resulting difference from its pocket. 

 

In the 1970s, futures were standardized on the quantity of the underlying asset called the lot, the amount of pledge - guarantee security, the size of margin, the step of price, the term of the contract - the time of expropriation. 

 

Also, in addition to the delivery derivatives, there were settlement contracts, where by clearing the financial result was recalculated with withdrawal of negative or accrual of positive margin to the account of the Seller or the Buyer. 

 

Concept of Open Interest Futures 

 

 

Futures are a standardized contract that is valid for a week, month, quarter, or year. This period is referred to as the time of expropriation. 

 

The number of futures is theoretically infinite - the exchange acts as the second party and issues a contract if the trader wants to buy/sell the futures and does not find the Seller or the Buyer on it. The site also keeps records of derivatives turnover, called clearing, checking margin collateral at the derivative instrument holder to prevent default in final settlements that take place on the last day of the futures or option term. 

 

The issued contract remains open until the trader closes it by making an "offset deal" - buying an equal number of derivatives sold or selling an equal number of contracts previously purchased (a total of zero). 

 

Any exchange is obliged to report on changes in open contracts, which are called "interest," and their volumes. Information about them is available to trading traders online (trading feed) and is publicly duplicated on the stock exchange (one or more times) during the day. 

 

Open interest (OI) futures is the aggregate amount of derivative contracts bought or sold, held by traders. 

 

As can be seen from the presented definitions, unlike the volume of trades on exchanges and Forex market, which states the fact of exchange of money and asset, OI characterizes the level of retained or closed positions, most accurately reflecting demand in the analyzed instrument. 


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