Open Interest indicates the number of all open options contract for the particular option. This is an important measure of liquidity as it indicates the overall active participation in the position. High open interest, or high participation, in the options contract gives the trader reasonable confidence that there will be a counterparty for closing or for adjusting the position over the contract life.
A option trading strategy in which combination of options are traded to exactly reverse the payoff of a short open position in a stock, without buying back the initial stock position. This new position is called a synthetic long stock.[click to read more]