Explanation:
Open interest is the number of outstanding futures contracts. When 100 contracts are physically delivered, those 100 long positions and 100 short positions are closed out, so open interest falls by 100.
Calculation:
Why B is correct:
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Q-150.4. Yesterday, there were 1,000 open long positions in futures contracts for a certain consumption commodity, and also 1,000 open short positions. Today, 100 contracts were physically delivered. What is today's open interest?
A
a) 800
B
b) 900
C
c) 1,800
D
d) 1,900