Open Interest (OI) limits set the maximum open interest allowed for a particular derivative contract. These limits maintain market stability and prevent excessive concentration of positions.
Open Interest (OI) represents the total number of outstanding futures or options contracts in the market at any given time. Brokers must adhere to the position limits (PDF) specified by exchanges:
-
Trading member limit:
15% limit on open interest for brokers.
-
Client-wise limit:
5% of the total number of all derivative contracts for the same underlying.
You can learn more about open interest by visitng Open Interest module on Varsity by Zerodha.