If the OI for any stock is let say 100000 , can i know as to how many of them are short contracts ?
Open interest means number of open contracts or commitments outstanding at one point of time. So if OI is 10 means there are 10 open contracts.A contract will be called open if a buyer and seller entered in to a trade which will be settled in future.
So for example, for one open contract of futures two people has to make a agreement,one will be long(buyer) and one will be short(seller) so for every one short one long will be there.As in your case of OI of 100000 there will be 100000 short contracts and 100000 long contracts.
So with only OI it is not suggested to make a call on particular direction to trade.Always use price movement and volume along with OI for odds to be in your favor.
Hello Siva
Thanks for the answer however i understand that for any transaction to happen there has to be a buyer and a seller.
However let me draft my question like this to avoid any confusion.
"What do we mean when the experts say that "A LOT OF SHORTS HAVE BEEN ADDED?
Secondly if they know that short positions have been added how do they know at which level or in which range the shorts have been added ?