We examine the information content of option and equity volumes when trade direction is unobserved. In a multimarket symmetric information model, we show that equity short-sale costs result in a negative relation between relative option volume and future firm value. In our empirical tests,...

We document the growth of retail options trading over time and provide evidence that retail investors are drawn to options by anticipated spikes in volatility. Using data on options trades by clientele groups, we show retail investors purchase options in a concentrated fashion before firms'...