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      Question

      Which of the following best describes the ‘Open

      interest’ in stock market?
      A Contracts traded in the cash segment Correct Answer Incorrect Answer
      B Sellers outstanding Correct Answer Incorrect Answer
      C Buyers outstanding Correct Answer Incorrect Answer
      D Sellers and buyers outstanding Correct Answer Incorrect Answer
      E Contracts outstanding Correct Answer Incorrect Answer

      Solution

      In stock market, the ‘Open interest’ is the total number of outstanding derivative contracts that are held by market participants at the end of each day. ·         Increasing open interest means that new money is flowing into the marketplace. The result will be that the present trend (up, down or sideways) will continue. ·         Declining open interest means that the market is liquidating and implies that the prevailing price trend is coming to an end.

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