The 1982 S&P 500 futures launch transformed how portfolio insurance could be implemented.

Evidence

However, as described in chapter 6, in April 1982 the Chicago Mercantile Exchange launched a futures contract on the S&P 500 index, the benchmark most widely used by portfolio managers. The introduction of index futures provided LOR with a far simpler way of implementing portfolio insurance, one that did not require interference with fund managers’ holdings. — Donald MacKenzie, An Engine, Not a Camera, 800

Categorization

• XREF: This builds directly on the performativity thesis across the book: the existence of a financial instrument (index futures) made a model-implementation strategy (portfolio insurance) feasible, a concrete case of markets shaped by models and instruments. — connects to: By late 1986, about 80 percent of LOR portfolio insurance was implemented with futures. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 803; Widely adopted portfolio insurance would amplify market price movements — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 809; Derivatives inverted from insurance into engines that increase volatility exposure. — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 91 (+1 more)

Broader Connections

• Widely adopted portfolio insurance would amplify market price movements #expands (0.78) — Donald MacKenzie, An Engine, Not a Camera, 809
• Portfolio insurance designed to limit losses can amplify market volatility. #expands (0.78) — Shapiro, Susan P., The Social Control of Impersonal Trust, 144
• Derivatives inverted from insurance into engines that increase volatility exposure. #expands (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 91