This thesis adopts an option approach to examine the stock price reaction to the stock repurchase announcements for both Exchange-listed and Over-the-Counter-listed companies in Taiwan from August 2000 to June 2009. We modify Ikenberry and Vermaelen's (1996) information-asymmetry-based exchange option hypothesis further into a call option hypothesis to accommodate the unique practice in the Taiwanese stock repurchase program. In addition, we conduct robustness tests by including the variables for both information signaling and free cash flow hypotheses which are supported by prior studies. First, we find positive abnormal returns around announcement day, which is similar to previous study. Second, our cross-sectional results support our call option hypothesis, which predicts that the positive abnormal return is positively related to risk-free interest rate, time to maturity and target buyback share fraction. And the abnormal return is negative to the size and market-to-book value of the announcing firm, which are consistent with the signaling hypothesis. However, we do not find any strong evidence for the free cash flow hypothesis.