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

Authors

Rich Fortin, New Mexico State University
Judy Maese, New Mexico State University

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.

JEL Codes

G13, G12

Keywords

NASDAQ , Nasdaq , Options, OTC, Liquidity

Recommended Citation

Fortin, Rich and Maese, Judy (1992) "Option Introduction and Liquidity Changes in the OTC/NASDAQ Equity Market," Journal of Small Business Finance: Vol. 2: Iss. 1, pp. 39-52.
DOI: https://doi.org/10.57229/2373-1761.1131
Available at: https://digitalcommons.pepperdine.edu/jef/vol2/iss1/4