Investor That Can See The Future

Chapter 20

In the recent Korean stock market, IT stocks soared, leading the stock market. Institutions and foreigners alike were raising their target prices and taking long positions.

Seoseong Electronics was in the midst of breaking through the previous highs and breaking all-time highs, and so was the stock market.

Gradually, there were rumors that it was too overheated compared to the real economy, and there was also an expectation that there would be adjustments due to profit realization.

The announcement of the discontinuance of the L6, which exploded at this point, was nothing more than pouring cold water into a heated furnace.

The rosy outlook is gone and pessimism has taken its place. Not only Suseong Electronics, but also related stocks and even unrelated stocks plummeted.

Fearful individuals threw their stocks away, and outsiders, who had been selling strong from the beginning of the market, did not turn to buying, but increased their selling.

In the second half of the market, institutions turned to buying, and even pension funds started to buy, but it was not enough to prevent the downtrend.

* * *

Not only the Korea Exchange, but also securities, investment trusts, and fund companies all fell into confusion.

The same was true of KYB Investment & Securities, the largest securities company in Korea.

It was the first time since the 2008 financial crisis that Seosung Electronics hit the lower limit. But then and now, things were very different.

During the financial crisis, not only Suseong Electronics, but also global companies that were called locals were down by tens of percent.

The biggest difference is that at that time, the upper and lower price limits were limited to 15%. However, it has now been expanded to 30 percent.

In other words, today is the first time in history that Suseong Electronics fell 30 percent.

Since the launch of the L6, Seosung Electronics has been on an upward trend, and since it was predicted that the stock price would rise in the future, Suseong Electronics stocks were accumulating regardless of pension funds or funds.

Investment trusts and brokerage firms also had significant institutional holdings.

No one could have predicted this situation.

Park Jong-il, managing director in charge of securities affairs at KYB Investment & Securities, took off his tie and sat down. The graph floating on the monitor stopped.

Due to the activation of the sidecar, the stock market is currently in a trading halt. For a while the storm seems to have subsided, but once the suspension is lifted, a bigger aftermath will strike.

The cell phone that had been ringing before the opening was still ringing. All of these are inquiries and complaint calls from big-time customers.

It’s been a long time since I put it back on silent because I couldn’t respond to each one as usual.

smart!

Team leader Kim Un-yong entered with a knock sound.

“Did you find it, Manager?”

“Did you know the amount of the put option loss?”

“We are currently figuring it out. Although there is a difference depending on the strike price, the KOSPI200 put option is hundreds of times higher…”

“Seosung Electronics put option?”

Team Leader Kim Un-yong bowed his head and said.

“More than a thousand times.”

“·················ogue.”

Park Jong-il closed his eyes tightly.

He had already expected it, but hearing it for himself made him feel like he was out of his mind.

As Suseong Electronics hit the lower limit, the spot loss recorded -30 percent. The problem was derivatives.

Until then, put options were a piece of paper, and call options were within the scope of exercise.

However, the sudden announcement changed the situation completely. All call options were out of the scope of exercise, while put options were all exercisable.

You might think that’s it, but the payout price for the call option wasn’t that great. On the other hand, the payout price for put options soared to more than hundreds of times the issue price.

I had no idea how much the loss would be.

tens of billions? hundreds of billions?

The derivatives market was practically an ant-blind money-scraper. It was like ants aiming for the jackpot bringing money to a financial company.

But it will suddenly turn into a boomerang and come back.

All securities companies that issued put options will have a hard time avoiding losses this quarter. Because of that, stocks were already plunging more than 10 percent.

It will be difficult for some small and medium-sized financial institutions to avoid bankruptcy.

Executive Director Park Jong-il gave the instructions.

“Check the status of derivatives, figure out how much ELW and put options are paid, and check the issued ELS knock-in section. Find a way to somehow reduce the loss on the option expiration date.”

“Okay.”

Even after the conversation was over, team leader Kim Un-yong did not leave the room.

When everyone looked at Park Jong-il, hesitantly opened his mouth.

“I have one thing to tell you.”

“Something?”

“I’m not sure, but it seems that the Golden Gate side bought the Suseong Electronics put option before the incident.”

“What?”

At those words, Managing Director Park Jong-il felt a shock as if he had been hit in the head with a hammer.

What does this mean?

“Did the Golden Gate side know and collect the information in advance?”

Team Leader Kim Un-yong shook his head.

“At first I thought so too, but apparently not. Golden Gate is also suffering a lot of damage from this incident.”

Golden Gate also issued various put options with KOSPI200 and Seosung Electronics as underlying assets. They also had to pay hundreds of times the issue price.

“If we had been informed in advance, we would have sold futures and cash, but there was no such move.”

If Golden Gate had known the information sooner than they did, they would have sold both futures and spot at the time they bought the put option. Unless you were going to sit back and turn your losses around.

“then?”

“It seems to have been bought by a specific corporation through Golden Gate.”

No matter how you invest, it is your own mind.

However, it is not an index, and it is a bit strange to focus on buying put options on specific stocks.

If the prediction was correct, and if it were wrong, the money would have been the issuers’ profits.

Without knowing the information in advance…

If this happens to be insider trading, it’s usually not a big deal.

Executive Director Park Jong-il gave the instructions.

“Let’s find out who it is. Let’s check how we got the information.”

“Okay.”

Team leader Kim Un-yong turned his body and left the room. There is now less than a minute left for the suspension to be lifted.

Managing Director Park Jong-il looked at the clock and muttered.

“What kind of people… are they?”

* * *

Taekyu and I were at a loss for words as we watched the falling stock price.

Both the KOSPI and KOSDAQ indices, which broke their previous highs, returned to their previous highs a few months ago.

Seosung Electronics, which hit an all-time high of 1,797,000 won the day before, fell to 1,258,000 won in an instant.

It was below the 52-week low.

When we short and buy a put option, the average price is 1.6 million won.

Short selling recovered losses at once and returned to profits of more than 20 percent. And it was not enough to say that put option was a jackpot.

Until yesterday, all options that were nothing more than a piece of tissue can now be exercised.

Those with a small increase rose hundreds of times, and those with a large increase more than 1,000 times.

Of course, this is based on the time of the crash, and based on our purchase price, it is much lower than that.

Stocks are not a zero-sum game.

Since it is not a closed market, there are many cases in which we all benefit or both lose.

However, in the structure of short selling and option trading, someone’s loss necessarily leads to someone’s gain.

Everyone’s disaster has become a blessing for us.

In the community, including the stock gallery, the sound of the song exploded.

-Today we will be holding the Han River Jeongmo.

– Recruiting expeditions to bungee jumping at Mapo Bridge.

– This isn’t some kind of ant hell.

-If the sidecar is released, it will fall further, right?

-Alas! I hope this is a dream

– First, you have to hit Im Jin-yong’s neck.

-Let’s wear L6 all over our body and rush to Seoseong Electronics’ Gangnam office!

-I want to throw L6 in the face of Dongjun Jo.

-If you resell the collected L6 to IS, wouldn’t it be possible to reduce the loss?

On the other hand, very few investors who invested in inverse ETFs or put options burst into cheers.

-Leveraged Inverse ETF I bought yesterday, +13.8% in just one day!

– 270x KOSPI200 put option!

-It’s a put party that comes once every 10 years. I’ve been waiting for today.

-How much would it cost if you were holding a put option for Seoseong Electronics?

– I would like to thank Vice Chairman Im Jin-yong and President Cho Dong-jun. Thanks to this, I recovered the money I had lost in stocks for 20 years in one day.

– Footmen will all laugh today. Fluffy haha!

– This is a put man who caught the foot of Seoseong Electronics. Today, I will go to a Lamborghini store, pull out an Aventador, and post a photo of my foot along with a certification shot. Whoops!(Read more @ wuxiax.com)

Taek-gyu rubbed his eyes and asked.

“Is this real?”

The situation is unbelievable for me as well.

I desperately wanted this to happen, but when it actually happened, it didn’t feel real. His head went blank, as if in a dream.

“It won’t be a dream.”

Taek-gyu raised his arms and shouted.

“Wow! We are rich now!”

I burst into laughter as I saw Taek-gyu cheering.

“You used to be rich.”

But now the 10 billion rich have become hundreds of billions rich.

Taek-gyu hugged me tightly.

“I love you, my friend!”

Normally, I would have pushed him about what men are doing, but…

I hugged Taehyung and shouted.

“We did it!”

* * *

Seosung Electronics, which closed at the lower limit the day before, started trading at 1,224,000 won, down 2.7 percent as soon as it opened the next day.

Fortunately, after a rebounding buying trend was introduced, it barely succeeded in rebounding, ending the market at 1,288,000 won, up 2.4 percent.

The stock market, which had panicked the day before, managed to regain stability, and the index successfully rebounded 0.95 percent.

The next day was the option expiration date.

Seoseong Electronics announced an exchange program with a refund policy through the media and announced that it would release the NT6, a derivative model of the L6, early, and focused on minimizing the aftermath of the L6 discontinuation.

In addition, the stock price of Suseong Electronics rose 6.6 percent on the option expiration date to 1,373,000 won thanks to purchases from institutions and pension funds, and both the KOSPI and KOSDAQ rose more than 2 percent.

The dollar, gold, and crude oil prices all fell, and the financial markets showed stability.

* * *

From the moment Seosung Electronics hit the lower limit, we started selling options. But put options have already skyrocketed, making it impossible to sell in the market.

And finally, the expiration date of the option has arrived. We liquidated the short selling and confirmed the profit.

The final rate of return is 5,170 percent.

[685,000,000,000]

With a return of more than 50 times the investment, the 13 billion won we invested grew to 685 billion won.