The Black-Scholes model legitimized options trading by rebutting gambling stigma

Evidence

This, then, is the environment into which Black-Scholes-Merton option theory was launched in 1973 (I will return below to the simpler theory of futures prices). The theory’s abstract mathematics might seem to inhabit a world quite different from the deeply social, intensely bodily interaction of trading pits. The Black-Scholes-Merton model, however, began to have effects on the Chicago Board Options Exchange almost immediately. Even more effectively than the economics of Baumol, Malkiel, and Quandt, the Black-Scholes analysis enabled the Options Exchange to rebut the charge that options were morally disreputable. — Donald MacKenzie, An Engine, Not a Camera, 703

Categorization

• XREF: Central to the performativity thesis: this is a model conferring legitimacy and reshaping institutional reality, not just describing prices. — connects to: Efficient-markets and random-walk theory legitimized options against their scandalous reputation. — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 62; The Black-Scholes theory reframed options trading as legitimate efficient pricing rather than gambling.; The legitimate investor is distinguished from the gambler only by a socially constructed discourse — Max Haiven, Cultures of Financialization, 327 (+10 more)

Broader Connections

• Black-Scholes rhetoric replaced ‘gambling’ with ‘efficient pricing’ in options discourse #expands (0.95) — 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
• Options trading faced regulatory gambling stigma persisting after exchange opening #corroborates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 704