Open Interest (OI)

Open Interest refers to the total number of outstanding contracts (options or futures) that have not been closed or delivered on a particular day.

It represents the total number of contracts that are held by market participants at the end of each trading day.

OI increases when new contracts are opened and decreases when existing contracts are closed out.

High open interest suggests that the market for that particular contract is active, with many traders participating. It indicates liquidity and interest in that specific contract.

Changes in open interest can give traders insights into market sentiment. For example, rising open interest along with rising prices might suggest bullish sentiment, while rising open interest with falling prices might suggest bearish sentiment.

Traders often use open interest along with price movements to gauge potential future market directions and to identify possible trend reversals.

Cumulative Volume Delta (CVD)

Cumulative Volume Delta is a measure of the difference between the total volume of buying and selling in a market over a specified period.

It helps traders analyze the strength of buying and selling pressure in the market.

CVD is often used in conjunction with price movements to confirm trends or identify potential reversals. For example, if the price is rising and the CVD is positive, it suggests strong buying pressure and confirms the uptrend.

Conversely, if the price is falling and the CVD is negative, it indicates strong selling pressure and confirms the downtrend.

Traders may also look for divergences between price movements and CVD, which can signal potential trend changes. For example, if the price is rising but CVD is falling, it might indicate weakening buying pressure and a possible trend reversal.