Date of Award

Winter 12-15-2015

Degree Type



Moore School of Business

Director of Thesis

James Austin

First Reader

Thomas M. Hughes

Second Reader

Thomas M. Hughes


As long as humans have had a concept of possession of items and a means of trading for them, there have been speculative position in the form of derivative contracts. The first instance of a written code of laws contains protection for farmers leveraging their future crops. Aristotle writes of an instance of the equivalent of call options being used to secure a monopoly on olive presses. Many features of contemporary derivative markets were developed in Europe during Medieval trade fairs or Renaissance bourse marketplaces. The development of the first modern stock exchange brought with it further development in the speculation of not just commodities but the performance of a company’s profits. The increased usage of derivative contracts known as options required that a sound mathematical model be developed to accurately price these instruments. That model would take three separate generations of academic and financial minds to develop. Centering on the idea of future stock price movements as a random variable, the Black-Scholes formula was ultimately discovered and allowed for the first regulated exchange markets for options that exist to this day.

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© 2015, Charles Austin Boyd