What is crucial is that LTCM conducted arbitrage, the central mechanism invoked by finance theory. To be sure, there are differences between the "arbitrage" that theory posits and arbitrage as market practice. However, some of what LTCM did was quite close to the paradigmatic arbitrages of finance theory. Aspects of its trading were similar to the arbitrage invoked in Modigliani and Miller's classic proof, and LTCM's option-market activities resembled the arbitrage that imposes Black-Scholes-Merton option pricing.

Donald MacKenzie, An Engine, Not a Camera, loc. 154