There is substantial anecdotal and academic evidence that informed trading occurs prior to informationally important events to exploit the subsequent change in stock price. However, almost all of the previous research examines only stock market activity. Despite the lack of research on the presence of informed trading in the options market prior to informational events, there are many reasons why informed traders would prefer the options market to the stock market. If informed traders prefer the options market to the stock market, we should observe price changes in the options market leading price changes in the stock market. / Although previous researchers had examined the lead-lag relationship, none had adequately investigated the lead-lag relationship when informed traders would have the greatest motivation to trade and none had examined the relationship for good news and bad news announcements, despite the special advantages that options offer in the case of short positions. Additionally, no researchers have examined the effect of securities regulation on the lead-lag relationship between the options and stock market. / Though the intraday tests suggest that, in general, the stock market leads the options market, the interday tests indicate that the options market leads the stock market for the sample which this dissertation predicts will be most likely, in the pre-ITSA period for earnings announcements less than expected. Thus, the evidence is that informed traders preferred the options market only for short positions and that this preference was eliminated with the passage of ITSA. / Source: Dissertation Abstracts International, Volume: 56-04, Section: A, page: 1468. / Major Professor: David R. Peterson. / Thesis (Ph.D.)--The Florida State University, 1995.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_77410 |
| Contributors | Conover, Charles Mitchell., Florida State University |
| Source Sets | Florida State University |
| Language | English |
| Detected Language | English |
| Type | Text |
| Format | 233 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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