The World’s First Options Trader Hit it Big in the Year 600 BC

Whoever said that philosophy doesn’t pay the bills hasn’t read enough history, or at least not enough to be familiar with Thales of Miletus, the ancient Greek philosopher who is often credited for the saying, as inscribed on the Temple of Apollo at Delphi, “Know thyself.” As a contemporary of Aristotle, Thales is considered by many to be the world’s first philosopher. But that’s not Thales’ only “first.” Aside from his contributions to philosophy, math, and the natural sciences, Thales can also lay claim to being the world’s first options trader.

First Philosopher. First Scientist. First Day Trader?

Thales of Miletus lived in ancient Greece approximately between 620 BCE and 546 BCE. While he’s not what anyone would call “one of the most wellknown” philosophers, he can lay claim to being one of, if not the most, influential philosophers. Known as the first of the Seven Sages of Greece whose maxims (like the above-mentioned “know thyself”) are inscribed on the Temple of Apollo, Thales’ influence is still felt today with impact and relevance that is even more impressive when you know that there is no written record from any of his work. Today, we only have the record from Aristotle and others to know what Thales discovered and taught them. Like the fact that he created the scientific method (I can hear the other philosophers now…“Dude! You’re making us all look bad”). Aside from being the guy who actually created the scientific method and was the first to break from using mythology to understand our world, Thales accomplishments span math, geometry, astronomy, and other domains:

• Thales “discovered” Ursa Minor, and its superiority to Ursa Major as a navigation device (remember, there was no GPS back then)
• Euclid built geometry in part by leveraging theorems that have been explicitly attributed to Thales.
• Thales was the first to be able to accurately predict a solar eclipse, which occurred on 28 May 585 BCE
• Thales was the first to understand the relationship between the equinox, the solstices, and the seasons.

One of Thales’ most interesting accomplishments is in how he became rich to prove a point to his detractors who claimed that philosophy was not practically applicable to our world.

Thales Profited From the Unknown

Thales wasn’t always a rich man. On the contrary, Thales was known to live in poverty and suffered taunts from others “with the uselessness of philosophy.” Like a true philosopher, Thales leveraged what was uncertain and unknown to demonstrate the power of his ideas. In an account from Politics, Aristotle relates an anecdote where Thales used his knowledge of astronomy and the seasons to predict the annual yield of olives and acquire a monopoly on the future use of olive presses. Per the anecdote, Thales then turned his control of access to the olive presses into profit massive enough to serve as a mic-drop moment:

“…from his knowledge of astronomy he had observed while it was still winter that there was going to be a large crop of olives, so he raised a small sum of money and paid round deposits for the whole of the olive-presses in Miletus and Chios, which he hired at a low rent as nobody was running him up; and when the season arrived, there was a sudden demand for a number of presses at the same time, and by letting them out on what terms he liked he realized a large sum of money, so proving that it is easy for philosophers to be rich if they choose” (Politics, 1259 a 6-23)

Aristotle marvels at how Thales was able to “realize a large sum of money” by “letting [the presses] out on what terms he liked” during the high-demand harvest season, but Aristotle may have exaggerated Thales’ actual capabilities given that it seems unlikely that Thales could have reliably predicted the precise future of the olive harvest that far in advance.

What Thales recognized, and Aristotle missed, was that profiting from the olive press venture did not require forecasting the harvest with precision. In fact, Thales actually understood that people’s inability to know the future creates a space for an opportunity and then capitalized on the inherent unpredictability of the yearly olive yield. He devised the first known options contract—an asymmetric agreement that limited his initial investment while providing outsized potential upside.

How can someone make money off what they don’t know, you ask? It’s done every day around the world by options traders. Thales just happened to be the first one. Ever.

Here’s how Thales might have thought it through:

“Verily, in the coming season the olive harvest may be plentiful or it may be scarce. Such is the nature of these earthly matters—impermanent and unpredictable. Yet, I have conceived a plan to profit from this uncertainty.

I shall approach the owners of the olive presses—Pittacus, Cleobulus, Solon, and others—and request that they grant me the exclusive right, but not the obligation, to use their presses, in exchange for a modest fee. Should the harvest prove meager, I shall likely recoup my investment, for the presses will still be mine to command.

But should the yield be bountiful, ah, then shall I reap the true rewards of my foresight! For I shall control the means by which the precious olive oil is extracted, and I may charge a princely sum to those who would press their olives. Thus, with little risk, I may transform myself from a humble man into a figure of great wealth and influence, all through the judicious application of reason and planning.”

The olive press owners, facing their own uncertainty in the coming months, may have seen merit in Thales’ proposal:

“Hmm, this proposal from Thales is an intriguing one, I must admit, and I have never heard its like. Neither he, I, nor even Apollo himself can truly foresee the bounty of the coming olive harvest. There is an inherent risk and uncertainty in such earthly matters.

Yet, Thales offers me a guaranteed source of income, regardless of how the harvest fares, right now! If I grant him the exclusive right to use my presses, he will provide me with a set fee upfront. This ensures that I receive at least a modest profit, even if the yield is meager.

And should the harvest prove bountiful, then Thales will pay me a good hourly rate for the use of my presses. In this way, I am able to mostly capitalize on the good fortune without having to shoulder the risk of a bad harvest myself.”

This agreement model, created out of nothing by Thales, represents two significant “first” moments. One, it is the very first known options contract, and two, it represented a specific type of options contract—an asymmetric option contract.

Asymmetry Is Another Word for Opportunity

An asymmetric option is one where:

• The buying party acquires the right (but not the obligation) to engage in a transaction (the use of the presses at harvest time).
• The buying party has a fixed/limited investment (the small price paid to reserve the presses months in advance) coupled with a return that can scale disproportionately when compared with the fixed investment.

In the simplest terms, Thales had a small/fixed amount of pain (the fixed price he paid to reserve the presses) with a gain that was uncertain but potentially large enough to make him comfortably wealthy for the rest of his life (the potential revenue he would get if the harvest was large).

It was like buying a lottery ticket that would either mostly pay him back his purchase price or make him a “one percenter.”

What Business Leaders Can Learn From a 2500+-Year-Old Philosopher

The point of this story isn’t to tell you to go and purchase lottery tickets.

The point here, is to help enterprise leaders from business and technology to understand the power of optionality and asymmetry.

Within Unbundling the Enterprise, we make the case, with economic proofs on one side and grounded case studies on the other, that APIs represent a low-cost lever to create and conserve asymmetric optionality inside scaled enterprises. If you’d like to learn the secret of finding and exploiting your own asymmetric options, buy yourself a copy today!

- About The Authors

Stephen Fishman

Stephen Fishman (Fish) is the NA Field CTO for Boomi. He is a practicing technologist who brings creativity, rigor, and a human-centric lens to problem-solving. Known as an expert in aligning technology and business strategy, Stephen places a premium on pushing business and technology leaders to embrace iteration and the critical need to collaborate across disciplines. Throughout his career, Stephen has consulted with organizations desiring to transform their technology-based offerings to better meet the needs of organizations and the people they serve. In addition to consulting with large organizations, Stephen is an in-demand speaker and advisor. Stephen has led multidisciplinary teams to deliver amazing results at Salesforce, MuleSoft, Cox Automotive, Sapient, Macy's, and multiple public sector institutions including the US Federal Reserve and the CDC. He lives in Atlanta with his family and when he's not working can be found biking on the many trails in Georgia.

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