The Estonian stock market's readiness for option introduction

Abstract: The purpose of this thesis is to find out whether or not the Estonian stock market is developed enough for introduction of a market for standardized options on index and stocks. This will be conducted through comparing the stock market development in Estonia today with the corresponding situation in Denmark, Hungary and Norway at the time of their introduction of trade in standardized options. Our conclusion is that Estonia’s stock market is less developed than the benchmark countries at the time of their option introduction. Especially the significantly lower turnover constitutes an obstacle. The capitalization measured as an absolute number and the number of listed firms are also lower in the case of Estonia. The volatility is comparable to the other countries in the comparison. However, the three first aspects indicate an insufficient degree of stock market development, making the Estonian stock market not ready for option introduction.