Open Interest (OI)

How Draconic reads it

Open interest is a snapshot of existing commitment. High OI at a strike means significant money is concentrated there, and both buyers and sellers have incentives around that level. More importantly, OI concentration drives market maker hedging behaviour; the larger their net gamma exposure at a strike, the more aggressively they trade the underlying around that level. Increasing OI signals new positions being opened: conviction entering the market. Decreasing OI signals positions closing: participants reducing exposure. OI shifts overnight, after the close, often reveal where institutional money moved while the market was closed, making overnight OI change one of the most useful pre-market signals available.