The paper examines option trading prior to significant information events. Moreover by Using a broad sample of merger announcements, It has been found that there is abnormal option trading prior to such announcements after controlling for merger characteristics. After the debt, This abnormal option trading is mainly concentrated in short-term debts and at-the-money options. Finally, I also investigated whether option trading volume can be used to predict takeover targets. I find strong predictive power of option volume for takeover targets.
Commenting by HaloScan
