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According to CME's definition of Open Interest, if Trader A is long 3 contracts, and decides to sell 1, then the open interest decreases by 1.

What I don't understand: if Trader A sells their contract, there must be some Trader B buying it. Then open interest should remain the same. Unless Trader B had a short position, in which case I could agree it decreases by 1. So it would depend on the buyer's position. What did I miss?

Will
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    Does this answer your question? Open Interest Change in Futures Trading. It's the third case in the example I linked. You are right, if a sells to someone new, it's not reducing OI. I think the CME example is simplified and only looking at individual people and their positions. It reduces OI of the person closing but increases OI if someone new is the counterparty, effectively leaving OI the same. – AKdemy Feb 10 '24 at 10:26
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    Yes it does answer, many thanks! – Will Feb 10 '24 at 11:19

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