The Son of Finance of the Great Age

  Chapter 166 Exploration (1)

"100 million U.S. dollars?" Andrew on the phone was startled, silently calculated in his heart, and said in disbelief, "Do you know how much it is? According to the current price, it is at least 50,000 tons Fresh copper!"

   "Not bad!" Zhong Shi replied decisively: "It's 50,000 tons of inventory. This time I want to play a big game in the copper futures market."

  Hoarding spot goods first and then pulling futures is a practice that futures professionals despise. However, in the history of commercial development, this kind of behavior often appeared. In the Qing Dynasty, Shanxi merchants bet on the next year’s harvest by making sorghum and sesame oil (monopoly), which was the prototype of futures.

The reason why Zhong Shi did this is to reduce the risk of entering a new market. After all, he is not familiar with the rules of the London copper market. problem.

Since the March contract can be bought and sold every day during the trading day, there is no phenomenon of multiple short squeezes, because the short sellers can absorb the spot copper in the market in the early stage and deliver when the main contract expires. After all, the market has every day. Copper delivery now.

After a little struggle, Andrew gave up his idea. After all, he has followed Zhong Shi for many years and has subconsciously obeyed Zhong Shi's orders. Besides, the current funds are as much as 500 million U.S. dollars, even if it costs 100 million to reserve Now copper, the remaining funds are more than enough to operate the market.

Andrew, who put down the phone, continued to absorb the soon-to-expire copper futures contracts in the market, and then frequently transported the spot copper from the LME London warehouse to the warehouse he rented. This process lasted until the end of April, and only absorbed three At this time, Zhong Shi called from Chicago and ordered Andrew to stop absorbing.

  The U.S. economic data for the first quarter has come out, and the growth rate of 7% has fallen below most of the glasses in the market. It also makes option investors who announced on April 6th that they have given up their right to be long are full of remorse.

In the United States, the largest trading volume of futures and options for a variety is often not on the same exchange. For example, the largest trading volume for futures is the Chicago Mercantile Exchange and the New York Stock Exchange, while the largest trading volume for options is the Chicago Board Options Exchange . But in London, options and options of the same variety are concentrated on the same exchange, such as LME copper options and options trading.

The design of LME copper options is roughly the same as that of futures. The trading volume is also a three-month option. It can be traded freely on any day before the execution month. The first Wednesday of the execution month is the announcement day, and the third Wednesday is the announcement day. Execution day, usually on the third Wednesday of each month, should pay close attention to the market, because the entry of options executives will form new short or long positions.

In January and February of 1994, the market's expectations for the future copper price were obviously not optimistic, and even the bearish atmosphere was very strong, which led to the sale of a lot of bearish options in the market. The attack was launched, and the copper price also fell by $51, but the bulls stubbornly pulled the copper price up to $1,900 on the second trading day, which made the dream that the short sellers wanted to execute empty, and was finally forced to give up on April 6. Most of the short options.

Logically speaking, this should be a good opportunity for the bulls to pull up, but some investors who bought bullish options in January gave up their power because the current copper price did not rise to the ideal price. Therefore, even in the first quarter of the US economic data Under the premise of the sharp rise, the trading volume of copper futures is also shrinking day by day. At the lowest point, less than 40,000 lots were traded a day.

  The market is waiting for an opportunity, an opportunity to change the trend.

   This opportunity finally came on the day when the May option was executed!

April 28, Wednesday, was the penultimate trading day in April. On this day, Zhong Shi rushed back from school to his apartment in Navy Pier for the first time. There were two phones online at the same time, and they were dealing with Andrew in London. And the agent, and at the same time his computer is displaying the quotations from London.

   "What's the situation now?" Zhong Shi checked the latest market prices on his computer while answering the call from his agent Brian.

   "The latest quotation is 1915, which rose by $5.50 yesterday, and the trading volume remained at around 40,000 lots." Brian briefly reported the current market and yesterday's trading situation.

On the other phone, Andrew has been listening silently. His task is to follow Zhong Shi's order to place an order. Of course, he uses another brokerage seat. In his account is the funds of Tianyu Fund, and in the Bryan's side is the funds of Skyline Capital.

   "Buy 100 lots, entrusted at the market price, June copper futures contract." Zhong Shi said. Entrusting at market price means making a deal at the latest market quotation, which is the easiest way to make a deal.

   "Okay!" Brian understood, and then switched the line, connected with other traders, and started to match in the market.

   "Andrew, you should also start to enter the market and build positions, and pay attention to the changes in the market." Zhong Shi instructed Andrew. For the copper that is matched by off-site telephone, the real-time transaction situation cannot be seen in the market, and the transaction situation of both parties can only be speculated on the computer.

  Before Andrew agreed, the phone rang here, and Brian said in a flat tone on the phone: "Mr. Zhong, the 100-lot contract has been traded, and the price is 1920. The contract on June 17 was traded."

"So fast?" Zhong Shi couldn't react for a while. For him who uses computers to trade in future generations, this trading mode is very new. He then refreshed the data on the computer and found that the current price has risen to $1920.

   "Open another 1,000 contracts, still at the market price, in June." Zhong Shi decided to increase his position again. His purpose was to push up the copper price. Naturally, he opened a new copper position to clear the long and short positions in the market.

   "1000 hands?" Brian was taken aback for a moment, and then said happily: "No problem, I'll do it right away." Then he switched the line.

"Andrew, you are gradually increasing your position in the July contract, and jointly push up the current copper price. You can operate with confidence, and don't forget that we have copper in our hands, so we don't have to be afraid of being forced into positions." Zhong Shi said to the people who had been listening. Andrew said.

As May is approaching, the trading volume of contracts on each trading day in May has begun to shrink. Zhong Shi is worried about liquidity, so the contracts he bought are all in June. June is the second main month.

The reason why Andrew is not allowed to buy and sell the June contract is because he is afraid that Zhongshi may be taken over by Andrew during the process of closing the position. Then it will be like changing the left hand for the right hand, and the accumulated positions will still have to be closed in the end, and the risk will be great. Quite a few.

  Five minutes later, Brian called again: "All 1,000 contracts have been sold, with an average price of $1,932."

   "Close 1,000 lots and sell at the market price, that is, those contracts just now." Zhong Shi couldn't wait for Brian to finish speaking, and he couldn't wait to give the order.

   "Flat?" Brian was taken aback for a moment, but he quickly realized and took action immediately. In fact, brokerage companies can be market makers, and they will match the remaining orders in the market. Telephone trading is very time-consuming, and it is not a good trading method at all.

  1000 lots of contracts appeared on the market, and they were sold quickly, with the average price still at 1932. After thinking about it for a while, Zhong Shi realized that the bulls were exerting their strength, otherwise the market price would definitely be suppressed by one or two levels.

   "Change more!" Zhong Shi thought secretly. From this point of view, the market outlook is that optimism has the upper hand, or the bulls want to take advantage of the opportunity to suppress the shorts, or they may have made short orders in the US copper futures market and come here to hedge. Either way, the trend ahead is up.

  But soon, the short counterattack came. Not long after Zhongshi’s 1,000-lot sell order was placed, the market took a sharp turn. The price of copper 3 plummeted, and soon fell to the position of 1,925 US dollars.

   "Open a buy order of 1,000 lots, at $1,925, still in June." This time, he is not entrusting at market price, but at limit order, in order to prop up the current falling situation.

What he didn't expect was that only 214 lots of the 1,000-lot order were sold, and the price of Copper 3 rose above $1,925. The short selling order was followed.

   "Don't cancel the rest of the orders, entrust them at the market price, and see how far the copper price can be pushed up this time!" Facing Brian's inquiry, Zhong Shi said decisively.

  Ten minutes later, the remaining 786 lots were finally sold, and the average price was pulled to $1934, while the current copper price has risen to $1937.

"It seems that the opponent's strength is very strong, and they actually wiped out the empty orders and extra exchanges at this price!" Zhong Shi shook his head, trying to drive away the dizziness. This is the time for him to rest, because of the time difference. He can only operate at night, because only at this time, the trading volume of Copper 3 in London is the largest.

   "Open another 1,000 lots, buy at the market price, and it is still the June contract." Zhong Shi took a sip of coffee, and then he felt a little sober. He did this to respond to the other party, but in this case, the other party may not understand his meaning, or take the opportunity to sell at a high position to change positions. In short, Zhong Shi's move is very rash and has a very big risk .

   Naturally, Brian would not remind Zhong Shi of this behavior. In fact, he wished Zhong Shi would operate more frequently, so that he could get more commissions.

   This time it lasted for a long time, and it took 20 minutes to complete the transaction. The average price has been raised to 1938 US dollars, while the market price has reached 1941 US dollars.

  The situation just now has attracted the attention of the market, and small follow-up orders have gradually entered the market to compete with the big bulls for selling orders, which made it impossible for Zhongshi’s lot to be traded at one point, and it took more than ten minutes for all of them to be traded.

   "Sell all!" Seeing a green line drawn from the computer, Zhong Shi ordered Brian without hesitation. This is a good time to escape at a high level, just to lock in the follower and other bulls in the market. Now it depends on how many long orders they can absorb, and at what price the short sellers will exert their strength.

   With regard to copper futures trading, the main thing is to deal with brokers. If they are all matched by phone, then there is no point in playing.

  (end of this chapter)