Question: Explain what is meant by open interest. Why does the open interest usually decline during the month preceding the delivery month? On a particular day,

Explain what is meant by open interest. Why does the open interest usually decline during the month preceding the delivery month?

On a particular day, the initial open interest on a given commodities futures contract was 20,000 contracts. On that day, there were 1,100 futures contracts traded. Of the 1,100 long futures traded on that day, 900 of them were closing out open positions, and of the 1,100 short trades on that day, 600 of them were closing out open positions. What was the open interest on that futures contract at the end of the trading day?

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