Open Interest
Definition
The total number of outstanding contracts that have not been settled. Rising open interest with rising prices signals growing conviction.
Example
Open interest in the Fed rate market increased from 50K to 80K contracts ahead of the meeting.
Related terms
Order Book
A list of open buy and sell orders for a contract, organized by price. The depth of the order book indicates liquidity and how easily you can enter or exit a position.
Liquidity
How easily you can buy or sell a contract without significantly moving the price. Higher liquidity means tighter spreads and less slippage.
Spread (Bid-Ask)
The difference between the best bid and best ask price for a contract. Tighter spreads indicate higher liquidity and lower trading costs.
Resolution / Settlement
The process of determining the outcome of a prediction market event and paying out contracts. Yes contracts pay $1, No contracts pay $0.
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