How credible is the widely held belief that the Federal Reserve supports the markets? While this ``Greenspan Put" has received much public attention there is little empirical evidence that documents its existence and significance. In this paper, we exploit the time-series variation in the Fed...

We use option prices to test if monetary policy has a significant impact on stock market participants' expectations. We find that, with loose monetary policy, traded equity put (call) options are significantly cheaper (more expensive) versus tight monetary policy. Higher call option prices...