How to read OI build-up: the four patterns every F&O trader should know

Open interest (OI) is the number of futures or options contracts that are still open. When you compare how OI changes against how price changes, four patterns appear.

1. Long build-up (price up, OI up)

New buyers are entering. Fresh long positions are being created, which means more participants are backing the move.

2. Short build-up (price down, OI up)

New sellers are entering. Fresh short positions are being created as price falls.

3. Short covering (price up, OI down)

Existing sellers are closing positions. The rise may be driven by exits, not new buying, so it can fade once the covering ends.

4. Long unwinding (price down, OI down)

Existing buyers are exiting. The fall may be driven by exits, not new selling.

How to use it

Treat these as context, not signals. Combine them with volume, the day's range and the broader index trend. Candle Trade's OI scanner lists every F&O stock in each pattern, refreshed through the day.

This article is for education only and is not investment advice.