Option-implied information and quality of patents

Wei Hsien Li, Jiahang Liang, Zih Ying Lin

Research output: Contribution to journalArticlepeer-review


This research explores how option-implied information predicts quality of patents. Using several measures of option-implied information, we find that only the option to stock volume (O/S) ratio positively and significantly predicts quality of patents around patent grant announcements. The findings are not entirely driven by information from the stock market and the probability of informed trading. Further investigations show that the predictability of O/S on patent quality is stronger when market sentiment is high, firms have a higher short-sale cost, and the quality of patents is relatively high.

Original languageEnglish
Pages (from-to)164-186
Number of pages23
JournalEuropean Financial Management
Issue number1
StatePublished - Jan 2024


  • option to stock volume ratio (O/S)
  • option-implied information
  • quality of patents


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