Option Introductions and the Skewness of Stock Returns

@inproceedings{Blau2017OptionIA,
  title={Option Introductions and the Skewness of Stock Returns},
  author={Benjamin Blau and Ryan J. Whitby},
  year={2017}
}
The decision to introduce options for stocks is made by exchanges with the intention of selecting stocks that will generate the most option trading activity. This study hypothesizes that exchanges will introduce options for stocks with positive skewness. The motivation for our tests is based on the idea that some investors have preferences for skewness and the payoff structure of options is conducive to these types of preferences. Results show that the likelihood of introducing options is… CONTINUE READING