# Why were options created?



## robots (1 April 2006)

hello,

why were options over stocks, indices etc created?


thankyou

robots


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## RichKid (1 April 2006)

robots said:
			
		

> hello,
> 
> why were options over stocks, indices etc created?
> 
> ...



Hi Robots,

Great question!

My guess is to help manage exposure to risk. Whether it be movements in market prices or the weather or maybe I'm mixing that up with futures (which carry an obligation as opposed to options which don't oblige you to buy or sell).

In the early days option contracts would have related to goods and produce but now it includes pure financial products too (eg to protect a share portfolio or other investment).

I've been told that large instos use derivatives to 'sell' their risk to us mug punters.

I bet the ASF options buffs would have some fascinating historical material to share with us....over to you folk!!


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## RichKid (1 April 2006)

Did a quick google, interesting stuff:


> *A Brief History of Options:
> Options in the Ancient World*
> 
> An applied mathematician called Thales (624-547 BC) may have been one of the first people to get rich by trading options.
> ...




Also a brief overview here:

http://www.optionsxpress.com/educate/investing101/history.aspx

So, the challenge for the next poster is to find an authoritative article on options/futures trading in ancient Africa! _On your marks, get set, go!!!....and they're off..._

They say that Africa is the birthplace of civilization, looks like the birthplace of financial instruments as well!


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