A passage in Nassim Taleb’s Dynamic Hedging (Wiley, 1997) recalled a story I had all but forgotten. In his Politics (1259a) Aristotle recounts the anecdote of Thales of Miletus. Here I’m quoting from the Benjamin Jowett translation. Thales “was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest in olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like. . . .” From this story and another one involving a man who cornered the market in iron, Aristotle drew that conclusion that by creating a monopoly you can in effect print money.
Taleb describes Thales’ feat in different terms. “Thales used the first derivative instrument, actually an option on a future, a second-order derivative at that! He did not trade olives, which he would have had to sell short, but chose to buy the equivalent of a call on the olive presses, for fall delivery, with the knowledge that all he could lose was his deposit.” (p. 13)
And you thought that Thales was just the guy who said that all things are made of water and who, the quintessential absent-minded professor, fell into a well while observing the stars!