What Leland had seen, however, was that although suitable actual puts were not available, a pension fund or other investor that desired portfolio insurance could use option theory to "manufacture" a synthetic put. Qualitatively, what was needed was to shift between stocks and cash (or government bonds) as stock prices fluctuated, buying stocks as prices rose and selling them as prices fell. If the value of the stock portfolio fell toward its floor, more and more of it would be sold, so the overall impact on the portfolio of further declines in stock prices became less because fewer stocks and perhaps eventually no stocks were held. Option theory could provide quantitative guidance as to how to do that in such a way that the desired put would be replicated precisely.

Donald MacKenzie, An Engine, Not a Camera, loc. 793