The Son of Finance of the Great Age

  Chapter 170 Option Trap

May 4, 1994 was the first Wednesday in May. On this day, options for this month will be selected. Although the market has fallen in the last two trading days, the decline in the whole day is not large. The volume is also relatively average, so the market is generally not optimistic about the market on this day.

   "Have you heard any rumors in London recently?" When the opening time came, Zhong Shi called Andrew. It is an extremely important day for the London non-ferrous metals market to announce whether the option will be implemented or not, and its result will directly determine the strength comparison between long and short bulls.

For example, if a short seller buys a bullish option at the same time as the short position, the lot size is exactly equal to the short position lot size. If he is pessimistic about the copper futures trend for a certain period of time before this Wednesday, he can completely reduce the loss by exercising the option. stop at a fixed position.

  For another example, if a bull buys long options while doing long positions, and the future trend of copper futures is as he expected, he can execute the options to further increase his position and maximize profits.

  In short, several different strategies have been derived for different directions, including hedging, hedging, chasing after the victory, and closing when it is good. Although the number of option transactions at this time is far from being as exaggerated as in later generations, and it cannot determine the number of positions in the option market, these options players are still an important group that cannot be ignored. Since the risk is much lower than direct investment in non-ferrous metal futures, and the entry threshold is relatively low, there are a large number of customers in this market. Even if the main funds are in the copper futures market, some people also reserve part of their funds in the options market.

  Once the future market is consistent with the options they made, as long as there is a slight profit to be made, they will choose to execute without hesitation.

And on the third Wednesday of each month, it is the most important day in the copper futures market, because on this day it has been announced that a large number of customers who have exercised options will enter the market. Open the edge of these newcomers.

  The reason why Zhong Shi asked this question was to inquire about the trend in London recently. If there are more bullish options, then he can consider raising the copper price, and then another new force will act as an ally. If there are more short options, then he can consider avoiding them first, and then pull them up when the time is right.

"Uh..." The situation of this kind of options can be regarded as a kind of information with a relatively high level of confidentiality. Andrew has no way to find out for the time being, but after hesitating for a long time, he still said: "There is no reliable information. Although the sky is opening higher, but the bears have the upper hand, I wonder if they are creating momentum for future execution?"

"Really?" Since he flew from Chicago to New York these two days, participated in a series of activities, and had to study homework during the day after returning, Zhong Shi really didn't have time to think about the issue of copper futures. After Andrew reminded him, Only then did he come to his senses, quickly flipped through the trend of copper futures in the last two months, and then focused on analyzing the market situation in the past two days, and said to Andrew thoughtfully: "Although the fundamentals are good during this period, the price fluctuations of copper futures It’s not too big, and the transaction volume is just average, it seems that something is brewing in the market.”

   "What's brewing?" Andrew asked hastily. He was most convinced by Zhong Shi, so when Zhong Shi expressed his thoughts, he hurriedly asked.

   Zhong Shi scratched his head, unable to answer. He just intuited that the fluctuation of copper futures price should not be like this. Although he did not get involved in the copper futures market in later generations, he also knew about Hamamaka Tainan. The predators have nothing to do with him. Although the fundamentals are not conducive to copper futures, "Mr. Hammer" still stubbornly raised the price of the near-month contract to an unbelievable level. It's really hard to say who wins and who loses.

   "How much copper has been collected?" After thinking for a long time, Zhong Shi finally gave up and asked about the acquisition of copper.

Andrew sighed, and said dejectedly on the phone: "It's not going very smoothly. Except for those accumulated in advance, there were not many contracts that were willing to deliver in April. Maybe they also saw that the fundamentals have improved, so In the end, the sell order was withdrawn. The inventory of LME has continued to increase in the past two days, and I don’t know if it is due to this reason.”

   "Really?" Zhong Shi keenly sensed that there was a problem, and asked eagerly, "How about the increase? Which month has the contract volume increased rapidly?"

Andrew was a little unresponsive, and then there was a rustling sound on the phone. Zhong Shi waited for five minutes before Andrew's voice came back from there: "LME's inventory increased by 5,040 tons in April. Today The previously released data has decreased by 325 tons, which means that 15 contracts were delivered, which was the same amount in the last trading day, and it still stopped three trading days ago."

   On the one hand, he couldn’t understand the disk, and on the other hand, the acquisition of copper was hindered, so Zhong Shi was a little speechless. But soon he realized that he was too worried, even if someone deliberately suppressed the copper price, he would not lose anything. Compared with the current position of only a few hundred lots, even if there is a sudden plunge, he can force the copper price to rise. After all, the LME system is not a daily settlement system, as long as it is possible to raise the copper price before delivery.

"Continue to observe, I'll rest first!" Zhong Shi left such a sentence irresponsibly and rested first. The non-stop running around for the past two days has made him very tired, so he didn't have much thought to think about the copper futures market What the **** is going on.

  Andrew couldn't laugh or cry when he heard the beeping sound from the phone. He originally wanted to explain to Zhong Shi the transaction of the previous two days. Although it was a slightly loss-making situation, the process was full of twists and turns, but before he could say it, the boss irresponsibly fell asleep . After hanging up the phone, Andrew immediately put on another expression, and shouted energetically to the traders who were already eager to try: "Boys, get ready to enter the market!"

  …

Not far from Andrew, the headquarters of Sumitomo Trading Co., Ltd., Hamanaka Yasuo is gathering all the traders together, and said with a very serious expression: "Masters, there is a very good period to raise copper prices. We must not only In the short term, the price of copper will be raised to a new height, and this price must be maintained. Now our position is very low. At present, our main direction of attack is to be bullish. The price of copper in the market is very low, which is obviously unreasonable and important. The most important thing is that the fundamentals are also conducive to long. The most important thing now is to mobilize all forces to ask your brokers for information about options, and you must inquire clearly, understand?"

   "Yes!" Dozens of traders in the audience bowed their heads in unison, and left the venue quickly and orderly after Hamanaka Yasuo finished speaking.

Although their brokers are copper futures, it does not prevent them from inquiring about copper options. After all, Sumitomo Corporation is a super customer of many brokerage companies, and the brokers have some personal relationships, although this behavior is a bit dishonest. , but there is no room for authentic people to survive in this market.

   Soon, the information these traders inquired was collected on Hamanaka Tainan's desk. After reading the thick stack of papers, Hamanaka Tainan lit a cigar, but did not smoke it, letting the smoke linger in the office.

   "Oshima-san, do you see a problem?" Hamanaka Yasuo nodded the table and signaled the person opposite to take a look at the stack of incomplete information. The reason why it is incomplete is that even the option brokers have a hard time knowing the choice of the option buyer, and only the exchange knows best. But these brokers are still able to capture a little bit of relevant information through the information between the lines.

The person called "Oshima-san" by Hamanaka Tainan is named Oshima Kenjiro. He is an energetic young man with a keen sense of smell. Many futures traders are jaw-dropping figures.

In addition to heavy positions, this Oshima Kenjiro is also particularly good at the market. He avoided the market several times when the market reversed, and he was able to catch the fluctuations in time during the subsequent rebound, which made Hamanaka Yasuo against the market. He looked at him differently and often cultivated him intentionally or unintentionally.

Kenjiro Oshima took the report. Although he had read the report before, he still read it for a quarter of an hour, then raised his head with a puzzled expression on his face: "It's nothing special, see It is not clear who implemented it and who did not choose to implement it.”

"You are wrong!" Tainan Hamanaka put on a mysterious smile on his face, and shook his head slightly, obviously disapproving of Oshima Kenjiro's analysis: "This report does not tell us anything, but we must You have to combine the recent market trends to see the mystery!"

"Oh?" Kenjiro Oshima's complexion changed, he tilted his head and thought about the market in the last few trading days, and found that there was nothing special about it, it was basically a very ordinary situation, and the trading volume was also very average. Various technical data have no obvious signs of supporting the rise, but combined with this report...he is confused!

"One of the possibilities is that the short sellers continue to suppress the copper price, so as to form the fact that the copper price is depressed in a short period of time, and then continue to put pressure on the long side through the high short position, and finally maximize the profit under the double suppression .This is only a possibility, but I personally think this is the biggest possibility!"

"What?" Kenjiro Oshima's face turned livid. He is also a battle-tested trader, so he naturally knows this trick, that is, while shorting the copper price, he buys a large number of short orders at a high position. After maintaining a relatively low position, earn the corresponding price difference by exercising the option.

For example, a copper futures contract is priced at USD 5,000, and the transaction price is USD 1,970. In terms of options, the execution price is generally higher than this price due to the premium. If it is USD 1,990, then he chooses to execute it at that time. Immediately on Wednesday, there was an additional empty order with a transaction price of 1990 US dollars, and then it was closed at the market price of 1970 US dollars, so a profit of 500 US dollars was made out of thin air.

  How many options may be accumulated in the options market for a short position that has been able to suppress the price of copper futures throughout April at a very low volatility and very low price? Thinking of this, Kenjiro Oshima shuddered a little!

   I planned to save more manuscripts, but I didn’t rush out many before the holiday. It’s really not easy to code words during the Spring Festival. I hope you can support me more, thank you~

  (end of this chapter)