Chapter 147 Bull Bankruptcy

  Yu Wei, relying on crude oil not to cut production, on November 29, 1993, the price of NYMEX crude oil futures contract directly gapped close to one dollar, and the opening price was $16.11, a drop of up to 5%. This decline caused heavy losses to the bulls, and also caused some short speculators to choose to close their positions. They are very satisfied with the current profits, and it has not been long since the main force of the contract entered in January 1994. home took over.

  Naturally, some people laugh while others cry, and the bull side suffers heavy losses. Unwilling to fail, they launched a fierce attack in the intraday session, but they failed as they wished. The highest intraday price rose to 16.20 US dollars, while the lowest price reached 15.78 US dollars. Obviously, the bears firmly held the advantage. Although there was a lot of effort in the late trading, trying to pull the oil price up to $16.00, but the short forces in the market were too fierce. In the end, the oil price closed at $15.97, which was only a line away from $16.00, but this price gap This day will never pass.

   "Zhong Sheng, this is the situation today, how do you plan to operate tomorrow?" Although there was a time difference of 12 hours, and it was already past three o'clock in the morning in Hong Kong, Andrew still called with all his heart. He had already liquidated all his positions that day, including Liao Xiaohua's. Both of them had more than doubled their profit on the oil index, which made them very happy on the phone for a while.

"Don't worry, today is fully digesting the systemic risk. I believe that there will be a large number of short positions in the market. Although these people are not the main force, they will disturb the sight to a certain extent and make investors have an illusion about the progress behind. I think the bears should stop here!" Zhong Shi calmly expressed his analysis. After the market closes today, it is the turn of the bulls to start worrying about the funds for settlement. If they do not raise enough funds to maintain their positions before the market opens tomorrow, they will be forced to liquidate their positions, and the market will still go down go trend.

When a trend has formed, the market may reverse within a day or two, but anyone with a little experience understands that it may be the disruption of ultra-short speculators, or the dying struggle of the wrong party. In this case, just keep the pressure on the wrong side, keep the trend, and they will throw in the towel very quickly.

  Now there is such a downward trend in the crude oil futures contract, and there is even a price difference with the spot market, which is a relatively rare situation. Generally speaking, the price of the spot market and the price of the futures market remain relatively consistent, but this month's contract is still some time away from delivery, and coupled with the extreme divergence of market opinions, it is not surprising that the two sides have a price difference .

   "Then continue to hold it and see the development of the market outlook?" Andrew asked a little timidly. In his view, it is safest to close all positions at this stage, even if it raises the oil price because of this, after all, the money that falls into the pocket is the safest.

   During this period of time, he looked at the constantly beating numbers on the computer screen, and his heart skipped a beat. It was a real billion dollars, with fluctuating profit figures. He woke up more than once in the middle of the night, dreaming that his position was blown up, all his wealth disappeared overnight, and he was even sued in court because of arrears. Regarding Zhongshi's funds, he dared not even dream about it. You must know that it is a billion dollars. Even after filing for bankruptcy, he probably will never get out of bankruptcy for the rest of his life.

He couldn't believe it no matter what, why Zhong Shi dared to be the hands-off shopkeeper in the middle of the operation, and let him and Li Mingyang complete all the operations. You must know that every minimum price change of these positions corresponds to it. It was a loss of about a million dollars. During this period of time, the two of them couldn't eat or sleep, and they lost a whole circle of weight.

Zhong Shi considered for a full minute before deciding: "Close thousands of positions every day, and leave the market without affecting the price." When he said this, he was extremely unconfident. Now holding more than 100,000 short positions, even if 10,000 lots are closed every day, it will take ten trading days. High oil prices eroded his floating profit step by step.

   But there is no way to do this, who made him the most important big short in the market!

  After the end of trading on this day, NYMEX announced the changes in the positions of each member seat as usual, and the HSBC seat reduced its holdings by 15,013 hands, which became the biggest attraction. Prior to this, the financial media had been paying attention to the changes in the positions of HSBC seats, because there was a very powerful short position active here, which made HSBC the culprit of suppressing oil prices, while large oil companies in countries such as Indonesia and the United Kingdom were one after another. It is speculated that it is the real holder behind this short position.

  When the news of HSBC’s holding reduction came out, the market’s first reaction was that these funds were about to liquidate their positions. After all, they had already earned hundreds of millions of dollars in profits, which was even worth the total annual income of some large multinational companies. Therefore, although the open interest increased by more than 10,000 lots on this day, it was selectively ignored by analysts.

   On November 30, the crude oil futures index jumped to $16.04 as soon as the market opened. The goal that the bulls failed to achieve in the previous trading day was easily achieved under the influence of the rumors that the shorts had left the market with a profit. The market was full of optimism, but the bears gave this sentiment a serious blow. Although the trading volume was the same as the previous trading day, showing that the market was fully active, oil prices finally closed at $16.04, neither rising nor Falling, despite intraday repetitions, the two sides generally drew a tie in terms of offense and defense, and oil prices did not change in the end.

  After the end of the day's trading, the market was surprised to find that the HSBC seat once again reduced its holdings by 10,000 contracts, which means that the short positions in this seat are gradually reducing their holdings, and the intention to leave the market is very obvious. What the market didn't understand was that, in addition to reducing its holdings on the short side, HSBC's seats actually increased its holdings by thousands of contracts on the long side at the same time.

   Not only market participants, but even professional media are speculating whether HSBC is trying to lock in profits, or is it bullish on the future oil price? In any case, the reduction in the front-month contract is a positive for the bulls. Then on the first trading day in December, oil prices finally rose by 0.39% to close at $16.10 as short positions continued to build positions.

  In the crude oil futures market, Zhong Shi reduced his holdings of 30,000 crude oil futures contracts in two days, bringing his position to 100,000 lots. In addition to crude oil contracts, contracts such as diesel oil have also been exhausted one after another. These contracts do not occupy a large share of the corresponding market, so they were all liquidated without much effort. In this process, a total of more than 125 million US dollars of profits were pocketed. This is real real money, not a number that changes anytime and anywhere.

  A total of 150,000 contracts, occupying a margin of less than 300 million US dollars, and another 700 million US dollars as a reserve margin. Now that one-third of the contracts are liquidated, they have made a profit close to half of the principal. Not counting the 100,000 contracts with a floating profit of more than 300 million U.S. dollars, this profit can be said to be very good.

   Just when the market thought that the short position in HSBC would continue to reduce its holdings, a piece of news about the long position began to circulate in the market, and the content was extremely appalling, even alarming NYMEX.

  The news is that a German metal refining and marketing company has suffered huge losses in the crude oil market, and has been unable to pay the losses caused by the huge position, and even its parent company German metal company. The company signed a ten-year long-term supply contract to provide gasoline, heating oil and jet fuel to American oil retailers at a relatively fixed price, with an option-like clause attached, that is, in the Within ten years, if the world oil product price is higher than the contract price, the US oil product retailer has the right to demand that the undelivered portion of the oil product price difference be converted into cash and paid to it.

   In order to avoid risks, German Metal Refining and Marketing Company established a long position of 55,000 lots of crude oil in the NYMEX market, and made a swap contract in the OTC market for hedging. When it signed the contract, it stipulated that part of the delivered oil products should be paid in a regular fixed amount, and the other part should be designated by customers at any time, so they can only make a fuss about the spot market and near-month contracts. When OPEC announced that it would not cut production, crude oil Futures plummeted, causing them to suffer heavy losses in the corresponding markets, including at least $200 million on NYMEX.

  These contract positions were established during the summer when oil was trading around $18, and the average price of their positions may have been higher than that. After German Metal established these positions, it originally hoped to use the extension to hedge the risks brought about by the oil supply contract. Who would have thought that the outbreak of systemic risks would cause them heavy losses all at once.

This is not the most fatal, their swap contract losses on OTC are even worse. According to insiders, their positions on swaps are equivalent to double that on NYMEX, which makes their overall losses at least 600 million USD or so.

Soon, the news was confirmed that in order to prevent default, NYMEX required German Metals to provide double margin, which made them have to pay another 50 million US dollars in margin at once, and at the same time canceled their hedging exemption qualification, which made German metals also had to liquidate a large number of positions while paying for the huge losses brought about by the financial market.

This can be said to be a leak in the house and it rains overnight. German Metals must close its long positions in the market and pay the corresponding losses at the same time. It just so happens that HSBC's seats are gradually closing their positions, so they are notifying the exchange of the situation. Next, start contacting short sellers who intend to close their positions, including Zhongshi.

   No matter which company loses so much money at once, the cash flow is likely to collapse, and the ensuing result can be imagined, which is to file for bankruptcy protection. There has been news that German metal is about to go bankrupt in the market, which also makes them have to quickly find the possibility of closing positions, and at this time, it is a good time to take advantage of the fire.

   Thank you very much for the reward from book friend Sov! At the same time, I would like to thank you for making me think about the continuous rewards for this book!

  

  

  (end of this chapter)