Open interest change

A

arturo100

I am a little ashamed to ask, but I found out that I don't have an answer to a very basic question on open interest.
If buyer A buys 30 options from the market maker and seller B sells 15 contracts of the same option to the market maker, the open interest is +45 or +15?
 
AFAIU, +15. For each contract, there is a buyer and a seller. The buy and sell creates one contract. "Sell to open" does not exist in a vacuum, it has to match someone doing "buy to open".
 
arturo100 said:
I am a little ashamed to ask, but I found out that I don't have an answer to a very basic question on open interest.
If buyer A buys 30 options from the market maker and seller B sells 15 contracts of the same option to the market maker, the open interest is +45 or +15?
More...
Assuming zero open interest to start,

A buys 30 options from MM, OI is now 30 (A long 30, MM short 30)

B sells 15 options to same MM, OI is still 30
(A is long 30, B is short 15, MM, is short 15)
 
Actually, my previous response was wrong (I got confused). It would be correct if it was 30 Buy to Open and 15 Sell to Close.

User A does 30 Buy to Open - market maker let's say has no position currently so he has to do corresponding 30 Sell to Open - 30 contracts are created and added to Open Interest.

User B does 15 Sell to Open - if it is the same market maker that takes the other side of the trade, then the market maker - responds with 15 Buy to Close - no new contracts are created. Open interest stays at 30.

Alternatively, if User B Sells to Open to a different market maker that has no current position and has to respond with Buy to Open - then Open Interest would increase to 45.

At least this is how I understand how it works.
 
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SunTrader said:
Open a contract (buy or sell) adds to OI

Close a contract (buy or sell) subtracts from OI.
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It really depends on both sides. If I buy to open a contract from someone else who is selling to close, there is no change in OI.
 
FSU said:
It really depends on both sides. If I buy to open a contract from someone else who is selling to close, there is no change in OI.
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Right I should have said in the aggregate.

100 traders buy and 101 traders sell, OI goes up 1 and vice versa 101 buy and 100 sell OI again goes up 1. If it were 100 and 100 stay the same.

As well with selling short and buy to cover, they would offset if equal amounts or add/subject if unequal.
 
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