Gain Immediate access to our Essays
FREE access exchanged for your work, or pay £4.99
... much as complex derivatives such as the inverse floaters, sticky jumps Zs, exploding options, zero cost collars and the rest. It was Aristotle who first recorded a suspicion that all might not be well where derivatives were concerned. Around 330 BC, in the first book of his Politics, he wrote down the first detailed description ever recorded of an options contract in a story about the philosopher Thales of Miletus. Aristotle claims that Thales invented options. However this is arguable as there is a record that at least a thousand years earlier the ancient Babylonians used a form of financing that looks remarkably like an option contract, designed to cope with the danger of bandit attacks on trading caravans. The process of fixing prices in advance- otherwise known as forward or futures contracts-were widely used in the ancient world. Since it took about a month to ship a cargo of ...