Open Interest

Think of open interest like a bet. You go down to the race track and put $10 on the 6 horse, Trample Me Slowly, in the fourth race. Until the winning horse crosses the finish line, you've got an open interest in that horse.

Now transfer that concept to a derivatives exchange, in the context of options and futures trading. You purchase an option to buy 100 shares of GOOG at $1,100, expiring in August. Until you close out the position, exercise the option, or let the option expire in August, that counts as open contract. Add up all the open contracts for GOOG with an August expiration...that equals the open interest for that type of option.