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The Information Content of Insider Call Options Trading
Author(s) -
Chen Robert,
Zhao Xinlei
Publication year - 2005
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/j.1755-053x.2005.tb00103.x
Subject(s) - insider trading , insider , business , stock (firearms) , stock price , monetary economics , stock market , finance , economics , mechanical engineering , paleontology , horse , series (stratigraphy) , political science , law , biology , engineering
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.