Options trading faced regulatory gambling stigma persisting after exchange opening

Evidence

The former counsel of the Chicago Board Options Exchange, Burton R. Rissman, told me that even after it opened it still faced the stigma of the association with gambling. For example, he visited a senior official of the Federal Reserve to try to persuade her to interpret its Regulation T, which restricts the extension of credit for the purchase of stocks, in a way that would facilitate the hedging of options by the exchange’s market makers. On her desk was spread out a Wall Street journal article on options, “and I could see, as I sat there, that some places were underlined in red … Everywhere that was underlined was the word `gambling.”’ — Donald MacKenzie, An Engine, Not a Camera, 704

Categorization

• XREF: Vivid illustration of moral categorization struggles over financial instruments; echoes moral panic literature and labeling theory. — connects to: Pre-1970s options were stigmatized as speculation and market manipulation tools. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 523; The Black-Scholes model legitimized options trading by rebutting gambling stigma — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 703; Options were once stigmatized securities but posed a tractable normal-science pricing problem — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 140 (+6 more)

Broader Connections

• Options were once stigmatized securities but posed a tractable normal-science pricing problem #expands (0.90) — Donald MacKenzie, An Engine, Not a Camera, 140
• Efficient-markets and random-walk theory legitimized options against their scandalous reputation. #corroborates (0.90) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 62
• Black-Scholes rhetoric replaced ‘gambling’ with ‘efficient pricing’ in options discourse #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 705
• Economists’ endorsement legitimated derivatives markets that regulators viewed as gambling #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1135