Price-OI Combinations

What this unit covers

Learn the four classic price and open interest combinations, long buildup, short buildup, short covering and long unwinding, and read them together.

By the end you will be able to

• Explain why price alone cannot show if a move is backed by new positions or by exits.
• Name all four price and Open Interest combinations from a given pair of figures.
• Apply the price and Open Interest grid to classify a fresh pair and judge if it may sustain or fade.

How it starts: Same Rise, Two Endings

1. A futures price you follow rises 4 percent, just like it did last month.
2. Last month the open positions grew from 10,000 to 14,000 contracts.
3. This time open positions have shrunk instead, so what does this rise mean?

Words you will meet

Open Interest (OI)

The count of futures or options contracts still open and not yet closed out.

Long Buildup

Price rises while Open Interest rises, showing fresh positions opening as buyers push price up.

Short Buildup

Price falls while Open Interest rises, showing fresh positions opening as sellers push price down.

Short Covering

Price rises while Open Interest falls, showing short sellers buying back to exit, not new buying.

Long Unwinding

Price falls while Open Interest falls, showing existing holders selling out, not new selling.

In this module: Open Interest Analysis

1. Open Interest Additions and Unwinding
2. Price-OI Combinations (this unit)
3. Call and Put Positioning
4. OI Walls, Shifts, and Event-Risk Limits