Derivative Load sets the open interest in this market against what the market itself is worth. It answers whether leverage is doing the work or whether the underlying is, which a currency figure cannot.

The reason for the comparison is arithmetic. A dollar total climbs whenever price climbs, even if not one new contract has been opened, and that flatters the number exactly when caution is most warranted.

What it actually measures

A low reading says the market is being carried by the underlying rather than by borrowed conviction. Advances built that way have less that can be forcibly undone.

A high reading says leverage is large relative to what sits beneath it. That does not make a decline inevitable, but it does mean any decline has more to feed on.

The reading is placed against its own record rather than against a fixed threshold, because the level has drifted upward for most of the market’s life as these venues grew faster than spot.

A dollar total flatters the market at the worst moment

Leverage measured in currency rises with price by construction. The figure therefore looks most impressive at the top of an advance, which is precisely when it should be read most sceptically.

Scaling it to the size of the market removes the illusion. What is left is the proportion of this market that is standing on borrowed conviction, and that proportion is the thing worth tracking.

What it does not tell you

The market value it is compared against is itself an estimate in places. An error of that kind moves the whole line up or down while leaving its shape and its turning points untouched, and the line’s height is what tends to get quoted.

The upward drift makes long comparisons awkward. A reading from the early record and one from today describe different market structures, so the position within the record carries the meaning.

It is silent on which side the leverage is on. A heavy load built from shorts and one built from longs read identically here, and they unwind in opposite directions.

How to read it

Spot-Led. Committed leverage is small set against what the market is worth, so the underlying is carrying it.

Balanced. Leverage sits in its ordinary proportion to what the market is worth.

Derivative-Led. Leverage is large set against the underlying market.

Saturated. Committed leverage sits at an extreme against the size of the market.

Find Derivative Load on the Derivatives dashboard, alongside OI Ratio, CGDI and CDRI.

Common questions

Why measure leverage against market value?

Because a currency total rises with price even when nothing new has been opened. Setting it against the market’s own size strips that out and leaves the genuine change in leverage.

What does a reading in the low single figures mean?

Open contracts worth a few per cent of what the whole market is worth. Stated that way the figure becomes something a reader can picture instead of an abstraction.

Why does the level drift upward?

Because derivatives venues have outgrown the spot market across most of the record. The drift means a level says as much about which era it comes from as about the day, so the rank is what to read.

Does the futures and options split matter here?

A great deal. A load built out of futures is far more prone to forced closure than the same load built out of options, so the split changes what the number implies.

Is a saturated reading a sell signal?

No. It says any move will have more leverage feeding it, in whichever direction that move happens to go, which is a statement about size and not about sign.