I have just read an interesting article by Epsen Haug and Nicholas Taleb in the Journal of Economic Behaviour and Organization . The working paper can be found here . They make the following somewhat controversial arguments in their paper: 1. Black, Scholes and Merton did not invent any formula - they just took an existing formula and made it compatible with neoclassical economics. 2. Option trading was a lot more developed and sophisticated prior to the development of the Black-Scholes-Merton model than we previously realised. 3. Option traders did not use the Black-Scholes-Merton formula after 1973. Instead, they continued to use their bottom-up heuristics which are more robust to high impact rare events. 4. The growth of the options market is not due to the Black-Scholes-Merton formula, but the development of computers with powerful processors. 5. Option traders use heuristics which are close to the Bachelier and Thorp approach to option valuation.