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This paper sets out to investigate the information content of options trading using a unique dataset to examine the predictive power of the put and call positions of different types of traders in the TAIEX options market. The author find that options volume, as a whole, carries no information on TAIEX spot index changes, essentially because the majority of trades originate from domestic institutional investors and individual investors; as such, they contain insignificant information. On the other hand, however, although foreign institutional investors do not engage in much trading, there is strong evidence to show that the trading in which they do engage has significant predictive power on the underlying asset returns.
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