CBOE’s founding president helped spearhead innovation of options
In true “Alexander Hamilton” fashion, Joseph Sullivan III worked his way into the room where it happened. In this case, the room was the old smoking lounge at the Chicago Board of Trade.
It’s where grain traders gathered in the late 1960s, sometimes when the day was slow, and talked about tapping into the more volatile stock market through an idea called options. Mr. Sullivan was assistant to the president of the Chicago Board of Trade and a former congressional correspondent for the Wall Street Journal.
He impressed people as a quick study who knew the right people in Washington. Of his arrival in Chicago in 1968, Mr. Sullivan wrote, “I didn’t know a lot about the Board of Trade but getting involved in the workings of financial markets held appeal as did the prospect of doubling my pay.”
His specialty became what he called “foreign relations,” educating federal regulators and others about the need for and benefits of options trading. He became steeped in the legalities of setting up such a market. His reward came in 1973, when Mr. Sullivan was named the first president of the Chicago Board Options Exchange, a post he held until 1979.
In a 2019 remembrance for the exchange, Mr. Sullivan said the start of the CBOE was “probably the most important stock market innovation of the 20th century” and “the greatest psychic satisfaction of my life.” He gave ample credit to others involved in the endeavor, including Board of Trade President Henry Wilson, who recruited Mr. Sullivan to Chicago. They knew each other from Wilson’s days shepherding civil rights legislation for President Lyndon Johnson.
The old smoking lounge became the exchange’s first trading floor. Launched with much uncertainty and a first- day volume of 911 contracts, according to Mr. Sullivan, the CBOE now averages more than 10 million contracts daily. It popularized the concepts of calls and puts — options to buy or sell — applied to stocks and stock indexes. The exchange, now part of a holding company styled as Cboe Global Markets, helped define Chicago as a center of financial innovation.
Mr. Sullivan, who worked on Wall Street
after his CBOE days, died Oct. 2 at his home in Knoxville, Tennessee. He was 82. His son Ross Sullivan said his father suffered from respiratory problems and had contracted COVID- 19.
Ed Tilly, Cboe chairman, said of Mr. Sullivan, “His dedication, determination and commitment to launching Cboe, in spite of many challenges, laid the foundation for the vibrant options market that exists today. Joe was immensely proud of what Cboe and the U. S. options industry would become. Our industry simply would not be what it is without Joe’s innovative thinking and leadership and we are forever grateful for his passion and genius.”
The exchange held a moment of silence Tuesday to honor Mr. Sullivan. An industry group, the Options Industry Council, has for 18 years presented an annual award that car
ries his name.
Knoxville was where Mr. Sullivan and his late wife Mary were born and raised. He always said he was descendant of Knoxville founder James White. Although they moved around for his career, the couple returned there in 1992 and were active in many of its organizations, including the art museum and the opera. His wife died in April 2019.
While he worked in Chicago, the family lived in Winnetka.
“As busy as he was, family meant the world to him,” Ross Sullivan said. “He coached my youth basketball teams in Winnetka.” He said family vacations also were prized, a tradition that later included his grandchildren. A favorite destination of Mr. Sullivan’s was Lost Creek Ranch in Moose, Wyoming.
Another passion was the University of Tennessee Volunteers, first the football and
basketball teams, then the entire range of male and female sports. “When I was young, we couldn’t get the games on the radio. He would have his father in Knoxville play the radio into the telephone, and this was in the days when long distance wasn’t cheap,” Ross Sullivan said.
Upon his return to Knoxville, the former reporter still had the journalism bug. For years, he owned and wrote for the Metro Pulse, a news and entertainment weekly that won awards for its content. It ultimately was absorbed by the Knoxville News Sentinel and was shut down in 2014.
Mr. Sullivan earned a bachelor’s degree in history from Princeton University and a master’s in journalism from Columbia University.
Survivors include Ross Sullivan and two other grown children, seven grandchildren and a brother. Services have been held.