Understanding how OI Works

F&O
1

Hey, these questions might sound silly/strange. But I am genuinely trying to look for answers. Please do comment with the answers or let me know if I am looking at things in a wrong way and what would be the right approach.

  1. If I buy option means someone else has sold me that option, this is a completely fresh transaction for both the buyer and the seller resulting in addition to the OI. Now If I have to cover my position, will I have to sell the option to the same guy who sold it to me or some other person who is looking to buy the option? (I know that we will not be aware of who sold us an options contract since everything is happening digitally, i am just trying to understand how OI works)

  2. If i am covering my position and selling to someone who does not have a position and is entering a fresh position, will it be considered as OI addition or will the OI not change?

2
  1. Person who wrote the option to you can cover his position who ever selling in market, it doesn’t have to be you. And when u cover your buy position, you maybe selling to someone who entering fresh or someone who wrote to someone else.

2.When option writers writes new contract they are adding supply to market, which increases OI. when writers cover their position they removing the supply hence it decreases OI.

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Hey, thanks. This helps a ton.