Consulting economists reframed options as legitimate investor strategy for regulatory approval
Evidence
Options, the trio argued, “enrich the investor’s repertoire of strategies by allowing him to realize a different set of payoffs than he would have realized in their absence.” Just as the possibility of carrying an umbrella was an advantage to the pedestrian, “the more strategies are available to the investor, the better off he is likely to be” (Nathan Associates 1969, vol. 2, pp. 14 and 20). — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 63
Categorization
- XREF: connects to: Efficient-markets theory helped legitimate options trading that regulators had long banned — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 62; US securities regulators viewed options trading with extreme hostility into the 1970s — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 61; Economists’ endorsement legitimated derivatives markets that regulators viewed as gambling — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1135
Related
- Efficient-markets theory helped legitimate options trading that regulators had long banned (similarity 0.87)
- Economists defended options by arguing they expand investors’ strategic repertoires (similarity 0.87)
- Economists’ endorsement legitimated derivatives markets that regulators viewed as gambling (similarity 0.83)
- US securities regulators viewed options trading with extreme hostility into the 1970s (similarity 0.83)
- Efficient-markets and random-walk theory legitimized options against their scandalous reputation. (similarity 0.82)
- Black-Scholes theory erased the stigma of options as gambling (similarity 0.82)
- 1960s economists reframed stock options as rational and desirable despite Wall Street’s dismissal (similarity 0.81)
- Options trading faced regulatory gambling stigma persisting after exchange opening (similarity 0.81)
- The Black-Scholes model legitimized options trading by rebutting gambling stigma (similarity 0.81)
- Economic theory helped restore legitimacy to banned financial derivatives (similarity 0.80)
- Economic theory succeeded in derivatives markets partly by making markets conform to it (similarity 0.80)
- Economic theory, not trader demand, forged the proposal for the stock-options exchange (similarity 0.80)
- Fairer option pricing let 1970s exchanges prosper where predecessors failed (similarity 0.79)
- Pre-1970s options were stigmatized as speculation and market manipulation tools. (similarity 0.78)
- Selling options on held stocks was argued to violate the efficient-market hypothesis. (similarity 0.78)
Broader Connections
- Economists’ endorsement legitimated derivatives markets that regulators viewed as gambling
#corroborates(0.90) — Donald MacKenzie, An Engine, Not a Camera, 1135