<P> In Ancient Mesopotamia, around 1750 BC, the sixth Babylonian king, Hammurabi, created one of the first legal codes: the Code of Hammurabi . Hammurabi's Code allowed sales of goods and assets to be delivered for an agreed price, at a future date; required contracts to be in writing and witnessed; and allowed assignment of contracts . The code facilitated the first derivatives, in the form of forward and futures contracts . An active derivatives market existed, with trading carried out at temples . </P> <P> One of the earliest written records of futures trading is in Aristotle's Politics . He tells the story of Thales, a poor philosopher from Miletus who developed a "financial device, which involves a principle of universal application". Thales used his skill in forecasting and predicted that the olive harvest would be exceptionally good the next autumn . Confident in his prediction, he made agreements with local olive - press owners to deposit his money with them to guarantee him exclusive use of their olive presses when the harvest was ready . Thales successfully negotiated low prices because the harvest was in the future and no one knew whether the harvest would be plentiful or pathetic and because the olive - press owners were willing to hedge against the possibility of a poor yield . When the harvest - time came, and a sharp increase in demand for the use of the olive presses outstripped supply (availability of the presses), he sold his future use contracts of the olive presses at a rate of his choosing, and made a large quantity of money . It should be noted, however, that this is a very loose example of futures trading and, in fact, more closely resembles an option contract, given that Thales was not obliged to use the olive presses if the yield was poor . </P> <P> The first modern organized futures exchange began in 1710 at the Dojima Rice Exchange in Osaka, Japan . </P> <P> The London Metal Market and Exchange Company (London Metal Exchange) was founded in 1877, but the market traces its origins back to 1571 and the opening of the Royal Exchange, London . Before the exchange was created, business was conducted by traders in London coffee houses using a makeshift ring drawn in chalk on the floor . At first only copper was traded . Lead and zinc were soon added but only gained official trading status in 1920 . The exchange was closed during World War II and did not re-open until 1952 . The range of metals traded was extended to include aluminium (1978), nickel (1979), tin (1989), aluminium alloy (1992), steel (2008), and minor metals cobalt and molybdenum (2010). The exchange ceased trading plastics in 2011 . The total value of the trade is around $US 11.6 trillion annually . </P>

In which city did organized option markets originate