First Options of Chicago, Inc. was one of the largest clearing members of the Chicago Board Options Exchange (CBOE) and other major U.S. exchanges. Its primary business was to act as a clearinghouse and guarantor for trades executed by its clients, who were primarily professional traders and other brokerage firms. The company played a critical role in the market's infrastructure by assuming the counterparty risk for these trades. However, during the severe market downturn on "Black Monday," October 19, 1987, many of its clients suffered catastrophic losses and were unable to meet their margin calls, leading to the insolvency of First Options. To prevent a systemic collapse of the financial system, a consortium of other clearing firms and banks, organized by the exchanges and backed by the Federal Reserve, orchestrated a bailout. The firm was subsequently acquired by Spear, Leeds & Kellogg in 1988, which itself was later acquired by Goldman Sachs in 2000.

Founded in

United States