7 Ross (1976) discusses conditions under which options may affect the opportunity set of investors. Similar analysis was undertaken by Hakkansson (1982), Green and Jarrow (1987) and Hodges (1992). All these studies argue that (derivative) introductions improve the welfare of the trader and are associated with a positive price effect.
8 As an alternative to shorting a stock, investors trading on negative information in the underlying stock will profit from writing a call when the stock price declines. This strategy produces a similar pay-off to an actual short sale. It should be noted that only warrant issuers can write a call warrant.