I propose an options market in which the underlying securities would not be sides of beef or shares of stock but ideas - the fruits of creative thinking - a Higher Options Exchange. This is how it would work:
Oct Jan Apr
Option Vol Last Vol Last Vol Last
Best Seller 170 11.5 b b 24 7
Better Mousetrap b b a a 1 1.5
Broadway hit 75 12.5 32 7.25 b b
Gold record 16 33.33 45 78 1 0.87
Good 5c cigar b b 7 98 b b
Great novel 100 .25 12 3 3 12.25
Latest fad 150 70 200 50.5 90 37.25
A broker, having become interested in representing a promising idea, would then submit to the conceiver contracts for exclusive rights to offer a specified number of options in the idea. The contract would typically specify a fixed, one-time fee for the trading right. But particularly promising ideas might command more attractive contracts, especially if there were competition among brokers to represent an idea.
Upon reaching an agreement with the conceiver, a broker would prepare a prospectus describing the idea and the tangible product expected therefrom, the expected date of realisation of the idea (which would also be the expiration date of the option), and the financial potential of the idea. The prospectus would also specify the percentage of royalties that the conceiver is willing to share with an option holder.
Once an idea option were listed, the conventional free market system would take over to set daily prices, which would be reported along with other market transactions in the customary media. Ideas would be expected to conform to quarterly fruition dates to coincide with the Higher Options Exchange option expiration dates.
There would be no trading in underlying stocks; the price of an idea option would be affected primarily by rumours of the creator's progress or lack thereof.
Should a creator fail to bring an idea to fruition before the expiration date, the holders of the options would retain the claim to a prorated share of any future royalties realised from the idea. This would prevent the creator from delaying so as to retain all rights.
The creative individual offering an idea obviously benefits by raising capital with which to realise the idea. This capital would come principally from the negotiated price the broker pays for the right to offer the option on the Higher Options Exchange. But particularly promising ideas might earn their creators a cut of the broker's commission on all sales that resulted in an increase in the option's price.