History of Options TradingOverviewDefinitionAncient history of optionsHistory of optionsHistory of optionsEarly Options in AmericaHistory of Chicago Board Option ExchangeSlide 9Option Clearing CorporationOptions TradingSummaryHistory of Options Trading By Viktoriya CherkassovaOverviewAncient history of optionsEarly Options in AmericaHistory of Chicago Board Option ExchangeThe Option Clearing CorporationSummaryDefinitionOptions are generally defined as a contract between two parties in which one party has the right but not the obligation to buy or sell a specified amount of an underlying security (stock, bond, futures contract, etc.) at a specified price within a specified time.Ancient history of optionsRomans and Phoenicians Romans and Phoenicians used contracts similar to options in shippingused contracts similar to options in shipping Thales of Miletus (624BC-547BCThales of Miletus (624BC-547BC))Greece mathematician and philosopher used Greece mathematician and philosopher used options to secure a low price for olive presses in options to secure a low price for olive presses in advance of the harvest advance of the harvestHistory of optionsThe Tulip-Bulb Craze1634-1637 Holland1634-1637 Hollandtulip dealers used call options to secure a tulip dealers used call options to secure a reasonable price to meet the demandreasonable price to meet the demand tulip growers used put options to ensure tulip growers used put options to ensure an adequate selling price an adequate selling priceHistory of options1650 - Yodoya rice market in Osaka, Japan Royal Exchange in London permitted forward contracting United Kingdom in 1711-1720 The South Sea Company purchased the "rights" to all trade in the South Seas.Early Options in AmericaIn the early 19th Century, call and put "privileges" were trade over-the-counter wasn't much in the way of a secondary marketall option contracts had to be exercised in personthe terms were differed for each contract In the mid 1800s, New York financier Russell Sage began creating synthetic loans using the principle of put-call parityHistory of Chicago Board Option ExchangeIn the late 60th Joseph W. Sullivan, Vice President of Planning for the CBOT proposed:standardizing the strike price, expiration, size, and other relevant contract terms create a mediator to issue contracts and guarantee settlement and performance (Options Clearing Corporation )History of Chicago Board Option ExchangeApril 26, 1973 CBOE began trading on standardized, listed options. the first day of trading:only call option911 contracts traded on 16 underlying stocks.By the end of 1974, average daily volume exceeded 200,000 contracts In 1975 the American Stock Exchange, Inc. (Amex) and the Philadelphia Stock Exchange, Inc. (PHLX) begin trading equity options. Both become OCC participant exchangesOption Clearing Corporationfounded in 1973, is the world's largest equity derivatives clearing organization operates under the jurisdiction of both the SEC and the CFTCclears transactions for put and call options on common stocks and other equity issuesequally owned by five participant exchanges that trade options: American Stock Exchange, Chicago Board Options Exchange, International Securities Exchange, Pacific Exchange and the Philadelphia Stock ExchangeOptions Trading The Black-Scholes model 1983 the CBOE created an option on an index of stocks. S&P 100, which remains the most actively traded exchange-listed option.1985, The New York Stock Exchange begins listing equity options. Options on NASDAQ stocks are listed October 1987, stock market
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