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The Impact Of Stock Options Trading On The Market Value Of Companies Listed In Kuwait Stock Exchange

Author

Listed:
  • Ghada Ali TIMRAZ

    (Amman Arab University, Amman, Jordan)

  • Faris Nasif AL-SHUBIRI

    (Amman Arab University, Amman, Jordan)

Abstract

This study aims to examine the impact of stock options trading on the market value of companies listed in Kuwait Stock Exchange. The phenomenon of volatility in securities prices concerned as a threat to the companies listed on Kuwait Stock Exchange, which forced companies' managers to deal with new financial instruments particularly financial options to hedge from those risks .we will take a sample of (30) companies that deal with stock options, these companies are listed in the appendices, we have chosen these companies because of the availability of adequate information about trading on stock options from 2006 to 2011. All companies must adopt options contracts because of its significant impact on the market value of those companies through the impact on the trading volume of companies' stocks and thus changes in the demand and supply of such shares which leads ultimately to changes in the value of shares of these companies in the market. The researcher recommends using options contracts from the perspective of the investor because of its role in achieving high and guaranteed profits, when exercising the option contract whether is call or put option at a predetermined price and thereby yielding a capital gains resulting from the difference between buying and the selling price.

Suggested Citation

  • Ghada Ali TIMRAZ & Faris Nasif AL-SHUBIRI, 2012. "The Impact Of Stock Options Trading On The Market Value Of Companies Listed In Kuwait Stock Exchange," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 2(3), pages 63-76, September.
    • Handle: RePEc:rom:bemann:v:2:y:2012:i:3:p:63-76
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    File URL: https://beman.ase.ro/no23/6.pdf
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    References listed on IDEAS

    as
    1. Ohad Kadan, 2008. "Stocks or Options? Moral Hazard, Firm Viability, and the Design of Compensation Contracts," The Review of Financial Studies, Society for Financial Studies, vol. 21(1), pages 451-482, January.
    2. D. Gkamas, 2001. "Stochastic volatility and option pricing," Quantitative Finance, Taylor & Francis Journals, vol. 1(3), pages 292-297, March.
    3. Santa-Clara, Pedro & Saretto, Alessio, 2009. "Option strategies: Good deals and margin calls," Journal of Financial Markets, Elsevier, vol. 12(3), pages 391-417, August.
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    Cited by:

    1. Apostu Simona-Andreea, 2017. "Factor Analysis of Credit Risk in Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 499-504, December.

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    More about this item

    Keywords

    Kuwait Stock Exchange; Investment decisions; International financial markets;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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