“Thales at the Olive Press: How an Ancient Greek Philosopher Created the Call Option to Prove His Doubters Wrong”

If we trust Aristotle’s account of the history of (metaphysical) philosophy, the first philosopher was Thales of Miletus. He’s the one who started “this sort” of philosophy, Aristotle says in the third chapter of his Metaphysics, not philosophy proper (Metaphysics 983b20).

Stereotyped as an absent-minded philosopher, Plato depicts him falling into a well while staring up at the stars (Theaetetus 174a). Aristotle’s history doesn’t help over-turn the narrative of philosophical basket-weavers: Thales’ claim to fame was positing that all things are really water (Metaphysics 983b20)!

Now, when I teach the Pre-Socratics, I normally point out that — laugh all you want — Thales’ claim about water is actually metaphysically profound. As the core idea of atomic theory is that everything we see is fundamentally the same (atoms), Thales’ “water monism” is an early version of the atomic view. But Thales didn’t need microscopes to come to this conclusion (nor did the Greek atomists, who claimed that all of reality was one fundamental type of “un-cuttable” [atomos] entity). He did it with pure reason, and that’s the fundamental distinction between philosophy and science.

For water to become ice and steam, the water, ice, and steam must fundamentally all be the same thing. For a baby to become a bigger baby from consuming breast milk (and not just a baby + x MLs of breast milk), the breast milk and baby must fundamentally be the same thing. This intuition is correct (babies and breast milk, like water, ice, and steam, are all fundamentally atoms), and the core idea of a unity behind a multiplicity is sound, whether or not Thales was right about the chemical composition of all things really being water, or the atomists really being right about all the atoms being fundamentally the same (instead of there being 100+ types of atomic elements, as we see on our periodic table).

But this post isn’t about defending Thales’ claims about water (or the souls of rocks, which he was led to because of magnetism). Instead, it’s about preserving Thales’ reputation as a genius in spite of Plato’s apocryphal story about his absentminded spelunking, and of philosophers’ abilities in general.

The life of the mind is not a lucrative one, but the story of Thales is a story of how those who don’t care about money are sometimes the best at thinking up ways to acquire it. But it’s not a moment of desperation that led Thales to Wallstreet. It would be easy to imagine him penniless, wanting a new book, needing to pay rent or whatever, and concocting a way to get it. But no, that’s not what drove him. It was instead his desire to prove others wrong (like making a website because your wife told you you couldn’t pull it off…).

In Aristotle’s Politics, we hear about a different side of Thales:

“When people criticized his philosophy as useless because he was poor, they say he perceived by studying the sky that there would be a good olive harvest. While it was yet winter and he had some money, he put down deposits on all the olive presses in Miletus and Chios for a small sun, paying little because no one bid against him. When harvest time came and everyone needed the presses right away, he charged whatever he wished and made a good deal of money — thus demonstrating that it is easy for philosophers to get rich if they wish, but that is not what they care about. So Thales is said to have showed off his wisdom in this way; but the story really illustrates, as we said, a general method of making money, namely to create a monopoly for oneself.” (Politics 1259a7-21)

What Thales did here, described by Aristotle as “creating a monopoly for oneself,” is very similar to the modern “call option” in finance. The monopoly part isn’t there (though there are ways to extend that analogy to options trading that I won’t get into here), but anticipating a drastic upward movement in price and paying for the option to capitalize on that price before the upward momentum, is close enough to a “call” option that I feel comfortable saying Thales invented them!

Let’s say it’s normally $10 to use the olive press for an hour under normal conditions. In a bad harvest season, there might be more open presses than people with olives that need pressing, so it drops to $5 an hour. In a good harvest, it can be $15 an hour or more depending on just how good the harvest way. As they say in the stock market, losses are always capped, but gains are unlimited (unless you’re short). Theoretically, if the harvest was 10 times greater than had ever been experienced, there wouldn’t be enough olive presses, and a bidding war could commence, going up to $100, $1,000, or even more per hour.

That’s how Thales proved his friends wrong about his “useless” philosophy: by inventing something analogous to the modern financial the call option.

The modern version of this can be done in basically any brokerage (like Schwab, Robinhood, or Fidelity), though you need to get approval before seeing it on your screen.

For example, let’s pick a random stock like Snapchat (SNAP).

SNAP is currently trading at around $8.15 per share, after a 15-20% pop this morning after reporting earnings. A $8.50 call expiring tomorrow (11/7/2025) can currently be purchased for 7.5 cents (but options are priced with a 100x multiplier, meaning it’s $7.50 for that contract).

This is not investment advice, and this would be a particularly stupid position to open on the long side (for context, I was on the other end, the short side, selling to open $8.50 11/7 SNAP calls this morning, when they were worth $40, meaning I already made $32.50 on each before eating lunch).

But say I thought SNAP would be worth $9 per share at market close tomorrow.

On that assumption, I can purchase the right to buy 100 shares of SNAP at $8.50, no matter how high it goes, right now for $7.50. If it closes at $9 or higher tomorrow, my profit will be the stock price, times 100, minus $850, minus $7.50. So if SNAP is $9.10 a share tomorrow, and I get to buy 100 shares for $8.50 each, that’s $60 profit (assuming I sell the shares right away), minus the $7.50 contract price — $52.50 profit off a $7.50 investment.

Contrast that with the same numbers, but buying shares. If I buy 100 shares now at $8.15, that’s $815. If SNAP goes to $9.10 per share, that’s $95 in profit, but off a $815 investment. For less money than 100 shares of SNAP, you could have gotten 100 $8.50 call contracts for $750, profiting $5,250.

The problem, of course, is that options expire, and if SNAP closes under $9 tomorrow, you lose everything. But if you happen to be an astronomer who can predict weather patterns, you can make a fortune.

This is how Thales invented the modern call option, over 2,500 years ago, simply to prove that his philosophy wasn’t “useless.”

Bibliography and Book Recommendations:

1.     The Texts of Early Greek Philosophy: The Complete Fragments and Selected Testimonies of the Major Presocratics. Part 1. Cambridge University Press. Daniel W. Graham.

• This is out of print and currently $400; a cheaper version with the same texts I cited can be found here: Philosophy Before Socrates: An Introduction with Texts and Commentary. Richard D. McKirahan.  https://amzn.to/47suOT1

2.     Aristotle’s Metaphysics. Hackett. C. D. C. Reeve. https://amzn.to/3LpQ830

3.     Aristotle’s Politics. Hackett. C. D. C. Reeve. https://amzn.to/43XYJAe

4.     Plato’s Theaetetus. Hackett. Myles Burnyeat. https://amzn.to/4hNxNcm

•      There’s a slightly cheaper version of this without Burnyeat’s 200+ page “introduction.” That one is fine if you want a smaller book (and that has a nice intro: https://amzn.to/4nJ7iGj), but the version linked above is a scholarly monograph on the Theaetetus by one of the world’s most famous Plato scholars packed into the same translation for a few dollars more (https://amzn.to/4hNxNcm).

Disclaimer: I do affiliate marketing for Amazon, meaning I get a small percentage if you purchase anything through those links or even add something to your cart that I didn’t recommend through one of my links. Note that I only recommend things that I think are good, that I own, and that I’ve used. I also want to note that I have a small (under $2,000) position in Snapchat (shares and 2026 and 2028 calls), that I am not a financial professional, and that this is not investment advice.