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The Success of Option Listings

59 Pages Posted: 7 Nov 2013 Last revised: 7 Dec 2014

Alejandro Bernales

Banque de France ; Universidad de Chile

Massimo Guidolin

Bocconi University - Department of Finance

Date Written: December 4, 2014

Abstract

We examine a number of 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 to control factors that have been found to be significant in earlier literature, such as stock volatility and volume. Moreover, we report that not only information asymmetries prior to option listings forecast a successful listing, but 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

Bernales, Alejandro and Guidolin, Massimo, The Success of Option Listings (December 4, 2014). Available at SSRN: https://ssrn.com/abstract=2351180 or http://dx.doi.org/10.2139/ssrn.2351180

Alejandro Bernales (Contact Author)

Banque de France ( email )

31, rue Croix des Petits Champs
75049 Paris Cedex 01
France

HOME PAGE: http://www.alejandrobernales.com

Universidad de Chile ( email )

Rep├║blica 701
Santiago
Chile

HOME PAGE: http://www.alejandrobernales.com

Massimo Guidolin

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

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