Option Introduction and Liquidity Changes in the OTC/NASDAQ Equity Market

Rich Fortin and Judy Maese
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Rich Fortin: New Mexico State University
Judy Maese: New Mexico State University

Journal of Entrepreneurial Finance, 1992, vol. 2, issue 1, 39-52

Abstract: This paper examines the impact of option listing in the NASDAQ equity market on the bid-ask spread of the underlying stock. We find that both the market adjusted percentage and dollar spreads decrease with option listing, which is consistent with a value enhancing impact of derivative security introduction.

Keywords: NASDAQ; Nasdaq; Options; OTC; Liquidity (search for similar items in EconPapers)
JEL-codes: G12 G13 (search for similar items in EconPapers)
Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:pep:journl:v:2:y:1992:i:1:p:39-52

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