Risk Latte - Origins of Stock Index Options

Origins of Stock Index Options

Rahul Bhattacharya
Mar 14, 2005


Insurance companies were the first to offer options on an entire stock market portfolio. In 1977 Harleysville Insurance Company provided a form of "portfolio insurance" for investors in certain mutual funds. This was equivalent to selling put options on the fund portfolios.

At the same time life insurance companies in the U.K. and Canada were offering equity linked life insurance policies with minimum value guarantees. This was in effect offering a fixed payment combined with a call option on an equity portfolio.

These developments took place long before the official and formal introduction of stock index options anywhere in the world. The first index options (on S & P 100 index) started trading on CBOE in 1983.


(Referenced from Stock Index Options by Menachem Brenner in Financial Options edited by Figlewski, Silber and Subrahmanyam).

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