Open Interest

Three scenarios determine whether open interest rises, falls, or holds steady after a trade. When a new buyer and a new seller transact, both are opening new positions, so open interest rises by one. When an existing holder sells to another existing holder who is closing their opposing position, two positions cancel and open interest falls by one. When a new trader buys from an existing holder who is exiting, one position transfers and open interest stays flat. On Prediction Market venues, open interest is particularly important near Market Expiry: a large remaining open interest means many contracts will pay out at Settlement, creating meaningful cash flows that can affect platform Liquidity and trader behavior.

Comparing open interest to Trading Volume reveals how the market is evolving. Rising open interest alongside rising Market Price suggests new money is entering the YES side, reinforcing bullish consensus. Rising open interest with a falling price indicates new NO positions are being built, signaling bearish conviction. Flat open interest with high volume means traders are rotating, not adding net exposure. On Kalshi, open interest data appears in the contract statistics panel and in the Trading API feed. On Polymarket, on-chain position counts serve the equivalent role. For Arbitrage strategies, comparing open interest across platforms helps identify whether discrepancies are thinly traded anomalies or deeply held views with significant Counterparty Risk implications.