I'm a newbie to options and my understanding of open interest is that it is the number of fresh positions made.
My doubt is regarding the meaning of fresh position. My understanding is that a position is made only when someone sells his existing position to the buyer.
Or is it like the exchange issues new contracts. If yes then who gets the premium for these new contracts issued. As there is no seller, I assume the exchange gets paid for this
My doubt is regarding the meaning of fresh position. My understanding is that a position is made only when someone sells his existing position to the buyer.
Or is it like the exchange issues new contracts. If yes then who gets the premium for these new contracts issued. As there is no seller, I assume the exchange gets paid for this