The Market for Equity Options in the 1870s




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    • Kairys is from Vytautas Magnus University, Kaunas, Lithuania. Valerio is from the Goizueta Business School, Emory University. We thank George Benston, Francisco Delgado, Krishna Ramaswamy, G. William Schwert (the referee), Greg Waymire, John Zacharias, and participants at the Finance workshop at the State University of New York at Buffalo, the Economic History workshop at the University of Western Ontario, the Finance workshop at the Goizueta Business School, the Wharton microfinance lunch workshop, and the 1993 meeting of the Northern Finance Association. We thank Christy Wasko for research assistance. This research was conducted while Kairys was on the faculty of the Richard Ivey School of Business, University of Western Ontario, and while Valerio was a Visiting Assistant Professor of Finance at The Wharton School. Kairys acknowledges the research support of the Plan for Excellence at the Richard Ivey School.


The introduction of exchange-traded options in 1973 led to explosive growth in the stock options market, but put and call options on equity securities have existed for more than a century. Prior to the listing of option contracts, trading was conducted in an order-driven over-the-counter market. From 1873 to 1875, quotes for options contracts were published weekly in The Commercial and Financial Chronicle during a period that saw extensive marketing efforts by a number of brokerage firms. In this article we examine these quotes to determine why this seemingly sophisticated market existed for only a brief period in financial history.