The Sarbanes‐Oxley act and informed trading in the options market: Evidence from share repurchase announcements

Ihsan Badshah (), Hardjo Koerniadi and James Kolari

International Review of Finance, 2021, vol. 21, issue 2, 645-652

Abstract: This study examines the informed options trading hypothesis before and after the implementation of the Sarbanes‐Oxley Act (SOX). We find that informed option trading, as measured by implied volatility spreads, occurs only in the period before the enactment of this Act but disappears thereafter. Our results suggest that the SOX had a significant impact on informed trading in U.S. option markets.

Date: 2021
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