We examine whether the availability of options makes the underlying IPO stock price more efficient cross-sectionally during the lockup periods. We find evidence that before 2008, optioned IPO stock’s price efficiency was greater than that of matched non-optioned IPO during the lockup periods through three measures. One advantage of the option market was that option market makers were exempted from share locating before transactions and the “close-out” requirement. After 2008, when the exemption was eliminated, optioned IPO prices were no longer more efficient than matched non-optioned IPO prices. These results prove that option introduction makes the underlying IPO stocks more price-efficient, particularly during the lockup periods when the short-sale constraints are binding.