1Introduction The ‘contractarian’ or ‘contractual’ theory of the corporation holds that a business corporation is a nexus of (incomplete) contracts between directors, shareholders, employees, suppliers, customers and other parties.Footnote1This idea, which is rooted in the economic theory of the ...
We take this idea to the market for S&P 500 options. This market is deep and liquid yet restricted to the Chicago Board of Options Exchange (CBOE) trading pit, which features a fixed set of designated market makers with an obligation to make a market.3 Importantly, the CBOE provides so-...
The index takes as inputs strike prices of the call and put options on the US Oil Fund options for near-term options with more than 23 days until expiration, next-term options with less than 37 days until expiration, and risk-free U.S. treasury bill interest rates. The idea is to ...