Question

Suppose that A is an individual investor and OL represents other investors. All the investors who hold short positions are denoted by SH.

Currently, A holds 2,000 contracts long and OL holds 4,200 long contracts.

Starting with the current holdings, determine the holdings of A, OL, SH, as well as the volume and the Open Interest after each of the following transactions and the end result:

Day 0. Current holdings.

Day 1. A shorts 500 contracts and OL longs 500 contracts

Day 2. A longs 700 contracts and OL shorts 700 contracts

Day 3. A longs 200 contracts and SH shorts 200 contracts

Day 4. A shorts 800 contracts and SH longs 800 contracts

Answer 1

Opening figures on Day 0
Total long positions (A 2000 & OL 4200) = 6200
total long contracts should equal total Short contracts. therefore SH = 6200

Day	Transaction		Open interest	Volume	A's Holding	OL's Holding	SH's Holding (in -ve since short positions)
	Parties involved	No of contracts
0	opening figures		6200	6200	2000	4200	-6200
1	A short: OL long	500	0	500	-500	500
1	Closing figures: day 1		6200	6700	1500	4700	-6200
2	A long: OL short	700		700	700	-700
2	Closing figures: day 2		6200	7400	2200	4000	-6200
3	A long : SH short	200	200	200	200		-200
3	Closing figures: day 3		6400	7600	2400	4000	-6400
4	A short : SH long	800	-800	800	-800		800
4	Closing figures: day 4		5600	8400	1600	4000	-5600

If both sides of the contract (long and short) are entering into a new contract, Open Interest Increases. (day 3)
If both sides of the contract (long and short) are closing out their positions, Open Interest decreases. (day 4)
If one party enters into a contract and the other party is closing out a position, open interest stays the same. (day 1 and day 2)