<p>This study examines the role of options trading in influencing the <i>production</i> of information in relation to earnings management practices. Options trading can impact information quality by increasing the speed and likelihood at which distorted earnings are uncovered by the market. We find a significantly negative relationship between options trading activity and both accrual-based earnings management and real earnings management. We further demonstrate that the effects of options trading vary by option type: call and put options have distinct directional implications. Specifically, the put-to-call options ratio is negatively associated with earnings management. For firms engaging in income-increasing earnings management, put option volume mitigates such behavior, while call option volume similarly curbs income-decreasing earnings manipulation. These results suggest that options trading functions as an external monitoring mechanism that enhances the transparency of financial reporting and disciplines management’s earnings manipulation practices.</p>