The Information Content of Insider Call Options Trading

Robert Chen and Xinlei Zhao

Financial Management, 2005, vol. 34, issue 2

Abstract: We examine the information content of two forms of insider trading, insider buy-, and sell-call transactions. We find that the information carried by stand-alone call purchases has only a short term impact on stock prices, but over a longer term, call purchases accompanied by stock purchases have a positive impact. Call purchases accompanied by stock sales signal negative information about the firm, suggesting that some insiders use complicated trading strategies to manipulate the market. Insider sell-call transactions are followed by negative returns, indicating these transactions are driven by negative information about the firm.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:fma:fmanag:chenzhao05

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