Trading options before Black-Scholes: a study of the market in late-seventeenth century London

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Abstract

This article uses data from the ledgers of the financial broker Charles Blunt to explore the market in equity options that emerged in London during the stock market boom of the early 1690s. Blunt's ledgers provide a unique opportunity to observe the workings of an early modern derivatives market. They reveal a broadly based and highly active trade in options. The market functioned well, determined value using agreed criteria, and was utilized by a diverse range of individuals to facilitate both risk-seeking and risk-averse investment strategies.
Original languageEnglish
Pages (from-to)8-30
Number of pages23
JournalEconomic History Review
Volume62
Issue numberS1
Early online date8 Jul 2009
DOIs
Publication statusPublished - 1 Aug 2009

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