History of Options
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History of Options. Ying Xie BA 543 Spring 2013 May, 21st. Timeline of Options Trading Development. 1872. About 1700 BC. 1634-1637. Options Trading in USA--- Russell Sage Options . Tulip Mania in Holland. Genesis 29 of the Bible . 1700 B.C. 1973-Present. Thales of Miletus - PowerPoint PPT Presentation
Transcript of History of Options
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Ying XieBA 543 Spring 2013May, 21st
History of Options
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About 1700 BCGenesis 29 of the Bible
1700 B.C About 624 BC-547 BC
Thales of Miletus----Olive Harvest
1634-1637
Tulip Mania in Holland 1973 About 1700-1733Options trading in London
1973-PresentChicago Board Options Exchange Opens
Timeline of Options Trading Development
1872Options Trading in USA--- Russell Sage Options
2Ancient History of OptionsGenesis 29 of the Bible (1700 BC)
3Ancient History of OptionsThales of Miletus (624 BC-547 BC)Greece mathematician and philosopher used options to secure a low price for olive presses in advance of the harvest.This was first recorded history of speculative option trading. The frame of current option trading system.
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Early History of OptionsThe Tulip-Bulb Mania1634-1637 HollandTulips were very popular and expensive with a high demand, as a symbol of wealth, prestige and great status.Tulip dealers used______options to secure a reasonable price to meet the demandTulip growers used______options to ensure an adequate selling price
callput5
The Tulip-Bulb Mania----ContdNov.1636Feb.1637speculative frenzy price of tulip bulbs skyrocketedOn Feb.1637The price of tulip bulbs had gotten so high that it can no longer find sensible buyers to sell to.The buying frenzy immediately turned into a selling frenzy. Price of tulip bulbs collapsed The Dutch economy collapsed and people lost their money and homes. Options trading gained a notorious reputation for being a dangerous speculative instrument.
6Options Trading in London in 18th and 19th centuriesfirst became well-known trading instruments in the 1690slow trading volume --speculative naturewas declared illegal in 1733was illegal until 1860
Early History of Options
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Options trading in the US - 1872Russell Sage was the first to create call and put options for trading in the US in 1872.First OTC options in the US Making millions within just a few short years Lost a fortune in the market crash of 1884 OTC options trading market continued
Early History of Options8Options trading in the US---Contd
Unstandardized and highly illiquidexercise price was fixed the expiry date was three months after purchaseThe pricing system was based on what sellers thought was reasonableOptions continued to trade in an unregulated manner until 1973.
9Chicago Board Option ExchangeApril 26, 1973 CBOE began trading on standardized, listed options. Under OCCs performance guarantees Growing Popularity of option trading ---The first day of trading: only call option ---By the end of 1974, average daily volume exceeded 200,000 contracts In 1977, put options introducedProvided a much more liquid and efficient option trading market.Defined how options are traded over a public exchange the way it is traded today.
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ReferencesHistory of Options Trading, http://www.optiontradingpedia.com/history_of_options_trading.htm Genesis 29 Bible Study, http://biblestudyoutlines.org/bible-study-lessons/old-testament-bible-study/genesis-29-bible-study/The History of Options Trading, http://ezinearticles.com/?The-History-of-Options-Trading&id=6416873How an Ancient Greek Philosopher Bet on the Future andWon, http://leightonvw.com/2013/04/01/how-an-ancient-greek-philosopher-bet-on-the-future-and-won/Chicago Board Option Exchange History, http://www.cboe.com/aboutcboe/History.aspxA Short History of Options, http://www.tradingmarkets.com/recent/a_short_history_of_options-677437.html
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