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Pricing the Future: The 300-Year Quest for the Equation That Changed Wall Street

3.67 of 5 stars 3.67  ·  rating details  ·  90 ratings  ·  15 reviews
Options have been traded for hundreds of years, but investment decisions were based on gut feelings until the Nobel Prizewinning discovery of the Black-Scholes options pricing model in 1973 ushered in the era of the quants.” Wall Street would never be the same.

In Pricing the Future, financial economist George G. Szpiro tells the fascinating stories of the pioneers of math

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Hardcover, 336 pages
Published November 29th 2011 by Basic Books (first published November 1st 2011)
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Maximilian Held
I was disappointed by this book. I'm not even an expert on the economics and math of it, but here's what bothered me:
- the story was littered with what seemed irrelevant biographical trivia of the authors. If there *was* a story or common theme behind this, I didn't get it.
- the prose is a bit clumsy and full of clichés.
- there's really hardly any history of ideas, putting the development of the options pricing formula in context. That's sad.
- oddly, and very much to my disappointment, the autho
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Patrick
Amazon review:
One of the major intellectual achievements of the 20th century was the theory of option pricing. This is its story, and it’s absolutely fascinating. Options have been around since the buying and selling of tulips and the very first efforts of investors to control their downside risk. But the economic value of such protections was not finally understood until the Nobel Prize winning research of Fischer Black, Myron Scholes, and Robert Merton in the 1970’s. It could not have happened
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Terry
The book should have been titled "The History of the Development of Statistics Pertaining to Things that Move Randomly and How Smart People Used that to Sometimes Make Money/Destroy the Economy". Once one comes to terms with the fact that the scope of this book is much larger than one would think, the text turns out to be both fun and engaging.

Options are a form of derivative (no actual commodity or security changes hands) where one gains the ability to buy or sell something at a future date and
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Ed Terrell
I can't decide why I liked this book so much. Is it the development of Bachelier's ideas from the 19th century on probabilities and financial markets? Is it the historical perspective of how our system of finance has come into being starting with creation of the stock market under King Louis XV? Or finally, is it how elegant theories mixed with our all too common human avaricious capacities can lead even the best, the most knowledgeable and the most connected astray?

From the tulipomania of Holla
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David
The books covers the advances in physics and probability theory that led to the establishment of the Black-Scholes formula for pricing options. The story is told using the histories of the the scientists and mathematicians involved, and puts them into historical context. It's a great read, and a great introduction to the history of this corner of finance and the history of this branch of probability. A good exploration of the history of Brownian motion, Bachalier's story is told, and even Einste ...more
James
Most of the stories in the book have been told by others,
the book is a cut and paste of many little stories from the past.

Nothing new.

The author seems to think the Black scholes equation is something important,
1. the key part of the equation is Implied volatility,
something not listed in the index.
2. What is implied volatility?
It's a fudge factor in the equation to make things work,
but the fact is, no one can know what IV is without knowing first,
what the price of an option is.

In theory, the B
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Brian
Jul 26, 2012 Brian rated it 3 of 5 stars
Recommended to Brian by: the economist
(3.5) Well-written history (emphasize history) of Black-Scholes

Traces the history of the formula to value stock options from the very beginning (issuing of stock, development of futures, tulipomania etc.). All good stuff, but for a few glaring typos, particularly in chapter 16 or 17 (missing words, use of a subscript instead of superscript on a particular term in text describing the formula). Some careless stuff in there.

So good history, well-told and enjoyable. But we're really light on the mat
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Aaron Hook
More of a 2.5 than a 2. Some good, interesting information in here, but it could have done away with a lot of the biographical fluff on various historical players, and maybe have added some more technical details. The writing was pretty mediocre and the copy-editing was not great.
Nick Ertz
You wouldn't think learning the history of the Black-Scholes pricing formula would be much of a read. This book changes that. The author thoroughly covers the history the market, and the history of the science that lead to the eventual discovery of the equation and its solution. It is an excellent and exciting trip through time which provides a solid understanding of what its all about. There are even some cautionary tales for the modern option buyer.
Rishi Patel
The author threw in a lot of needless information of many many people that weren't key figures in this book. I was a bit disappointed because I thought it would be more along the lines of how the Black Scholes formula formed the derivatives market, but this book is about the history behind the creation of the formula.
Chris Mcmanaman
Great book. Its amazing how all these scientists built on each other. It is funny to read about how economics papers were written and that mathematical formulas were shunned from the academic community.

I really should read this book over again so I understand it completely
Troy
A great walk through the history and evolution of pricing financial options. I thought it was especially engaging how the author tied in landmark advances in the natural sciences which contributed to the math of finance.
Bryce
Very interesting. Makes a few unsubstantiated claims here and there, and not enough citations.
Greg Mcavoy
Starts slow, but gets better once it gets to Black-Scholes.
Philski
Easy read. Not as technical as I was hoping for.
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George G. Szpiro is an Israeli-Swiss applied mathematician and journalist, who has emerged as a writer of popular science books.
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