The Success of Option Listings
59 Pages Posted: 7 Nov 2013 Last revised: 20 Feb 2019
Date Written: September 20, 2016
We examine unexplored factors that affect the ex-post adoption rates of newly listed stock options. We show that a variety of measures of information asymmetries concerning underlying stocks predict option adoption rates. These predictive relationships are robust after including factors that have been found to be significant in earlier literature, such as stock volatility and volume. Moreover, we report that not only do information asymmetries prior to option listings forecast a successful listing, but also that successful listings themselves end up reducing ex-post the extent of the information asymmetries affecting a stock.
Keywords: stock options, option listings, asymmetric information, adoption rates, option volume, open interest
JEL Classification: D82, G10, G14, O31
Suggested Citation: Suggested Citation