Death comes to us all. Life's but a walking shadow | Presumably when that big farmer who had previously hedged his price by sell 10 futures sells the physical corn he lifts his short hedges. He does that by buying 10 contracts. Now he's zero but somebody else just sold those same 10 contracts. Let's suppose for instance Managed Money has a stack of long contracts which they had previously purchased from all those other big farmers and they sell the big farmer ten of theirs.. Poof, open interest just declined by 10 contracts.
Generally you can distingish net new buying from covering if as the price goes up total open interest increase. If on the other hand open interest declines as the price increases that's net covering. |
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