Option listing and information asymmetry
Between 2001 and 2010, US stocks selected for option listing are estimated to experience increases of 16.8% in informed trading and 27.8% in uninformed trading, no significant change in the probability of information events, and a decrease of 11.5% in the probability of informed trading compared to unselected stocks with similar propensities of listing. Dynamic analysis shows the effects mainly come from the first month after listing. A placebo test shows that options on Exchange-Traded-Funds increase only uninformed trading. Options also facilitate incorporation of private information. The results suggest that options improve the overall market information environment.
Option listing and information asymmetry. (2014). Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/4542