Under which of the following situations does the open interest increase by one contract?

a new sell order meets a new buy order

an offset buy order meets an offset sell order

an offset sell order meets a new buy order

and offset buy order meets a new sale order

two new sale orders meet one new buy order

Solutions

Expert Solution

The 1st option is right option.

Explanation:

When a new sell order meets a New Buy order, the Open Interest increases by 1 contract

When an offset buy order meets an offset sell order, the Open Interest decreases by 1 contract

When an offset sell order meets a new buy order, the Open Interest remains unchanged

When an offset buy order meets a new sell order, the Open Interest remains unchanged

When two new sale orders meet one new buy order - information incomplete whether the second buy order is a new or offset buy order, if it is new buy order, open interest will increase by 2 contracts, when it is an offset buy order, open interest will increase by 1 contract

Hence, 1st option is the correct answer.

The 1st option is right option.

Junaid answered 1 year ago

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