ABSTRACT
The analysis of the history of the Chicago Board Options Exchange explores the performativity of economics, a theme in economic sociology recently developed by Callon. Economics was crucial to the creation of financial derivatives exchanges: it helped remedy the drastic loss of legitimacy suffered by derivatives in the first half of the twentieth century. The most challenging recent theoretical contribution to economic sociology is Callon's assertion of the performativity of economics. This chapter explores performativity by examining one of high modernity's central markets, the Chicago Board Options Exchange (CBOE). It also explores the cultural and legal barriers to the creation of financial derivatives markets in the United States in the late 1960s and early 1970s and describes the role of economics in undermining those barriers. The chapter describes how theory is performed in today's CBOE and focuses on the presence of a phenomenon at variance with canonical option theory: the volatility skew.
