Open interest (prediction markets)

Prediction-market open interest counts every contract currently outstanding, bought and not yet sold or settled, for a specific market. It's a stock measure, a running total at a point in time, distinct from volume, which resets and counts only the contracts that changed hands within a given window, like a single day. A market with 50,000 contracts of open interest has that many outstanding positions somewhere between buyers and sellers, regardless of how many of those contracts actually traded today.

Rising open interest alongside a moving price suggests new money is entering the market and taking a fresh view, similar to the same read in options markets. Open interest that stays flat while price still moves suggests existing holders are simply trading among themselves rather than fresh capital forming a new opinion. Comparing open interest against volume, sometimes expressed as capital velocity, volume divided by open interest, shows how actively a market's existing size is turning over on a given day versus sitting largely static.

Open interest measures how much capital is committed, not which direction it's leaning or how confident it is; a market with large open interest split roughly evenly between yes and no holders looks identical in this one figure to a market where nearly everyone is on the same side. It's also not a liquidity guarantee by itself. A market can carry meaningful open interest built up over weeks while currently having a wide bid-ask spread and little fresh volume, making it harder to enter or exit a large position at a fair price than the headline open interest figure alone would suggest.

Suppose a Fed rate-decision market shows open interest of 120,000 contracts with a full day's volume of only 8,000 contracts traded, a capital velocity of roughly 0.07. That's a market with substantial standing capital committed but comparatively quiet trading that day, likely because the outcome isn't due to resolve for a few more weeks and there's no fresh news to react to. Compare that to the same market the morning after a surprise inflation print, where volume for the day alone might jump to 45,000 contracts against the same 120,000 open interest, a capital velocity near 0.38, reflecting a burst of repositioning around the new information.