Chapter 506 Complete collapse

If you set up a long order of 0703 natural gas at a price of US$7.05, and then open a short order of 0704 at a price of US$5.05, this forms a typical shoulder arbitrage combination, and the difference of US$2.0 in the middle is the profit of this position where.

  If the price difference is maintained and expanded, this shoulder arbitrage combination will continue to make profits. Once the price difference between the shoulder arbitrage position combinations narrows, the combination will lose money.

   It is not the worst case that the price difference between this combination narrows and leads to losses. On top of that, the two-month contracts also lost money amid the narrowing spread, a situation that puts the entire position at risk of collapse.

  For example, the contract price of 0703 is reduced to 6.50 US dollars, the price of 0704 contract is reduced to 4.90 US dollars, and the price difference between the two is reduced to 1.6 US dollars. In this case, although the two-month contracts were mixed, and the portfolio as a whole lost $4,000 in spread, that was not the case.

  First of all, the contract price in March fell, and each contract lost $5,500. In order to maintain the position, this part of the loss needs to be made up with cash. In addition, although the 0704 contract is profitable, it is impossible to secure this part of the funds before it is liquidated. So, in fact the loss on this portfolio is $9,500.

To make matters worse, if the contract price of 0704 rises to $5.25, and the price difference between the two contracts narrows to $1.25, in addition to the loss of $7,500 in the difference, the contract of 0704 also loses $2,000. Together, the loss would amount to a staggering $15,000, which is not far behind the $20,000 gain from the previous arbitrage.

  If it’s just a contract, it’s fine to liquidate it in the market in time, because the liquidity is sufficient. And if it is a huge position, it is basically impossible to liquidate it in a short time, especially when the news leaks, and the market is full of coveted people. The warehouse is even more difficult.

  Now, this is the situation encountered by the Evergreen Fund, which is why even after hedging is done, the loss will expand rapidly.

   "What should we do now?"

  At this time, Hu Ping walked up to Zhong Shi, staring at him with burning eyes, waiting for Zhong Shi to give a clear answer.

At present, there are two ways before Hu Ping's team. The first way is naturally to continue to attack and wait for the opponent's losses to become more and more serious; When the other party is at the end of the road, they will pocket the profits, but in this way, I am afraid that they will let the other party die.

Hu Ping is inclined to the latter, because for him and his team, the current profit is enough to satisfy them, and even exceeds their profit at the peak of Leimen Brothers, and in the case of 12% share , They can at least get a share of more than 100 million US dollars, which is enough for him to start his own hedge fund.

  However, he was not sure what Zhong Shi was thinking. Even if the entire Everlasting Flower Fund collapsed, he might not be noticed by this young man, Hu Ping secretly thought.

   "Keep watching, don't rush to close the position."

Sure enough, after frowning and thinking for a while, Zhong Shi gave a negative opinion. Hu Ping nodded silently, but the next moment Zhong Shi's explanation gave him a feeling of enlightenment, "Don't forget, this time coveted We are not the only ones withering flowers, and I even suspect that they have an alliance. This time we got a relatively large position by accident. It can only be called luck. You should notice that the New York Daily News two days ago According to the report on the Internet, the agreement to sell the asset portfolio of the Undead Flower Fund has not been reached. We don’t know exactly what happened, but what is certain is that someone must be behind the scenes. Therefore, if we close the position now, it may be Disrupting their overall plan, the best result is that they will take our closed position forcefully and continue to be short, and the worst..."

  Zhong Shi didn't continue talking, but instead sneered, which obviously foreshadowed that there might be a situation that no one wanted to see later.

After hearing Zhong Shi's cocoon-like analysis, Hu Ping was startled. Only then did he realize that he was temporarily dazzled by the benefits, and he didn't expect that there was someone else behind him, so his face swelled immediately. Flushing, na na for a long time, but can't say a word.

"You don't have to take it too seriously. After all, this matter is too complicated, and no one can fully control the situation." Taking a full view of Hu Ping's embarrassment, Zhong Shi guessed his mind after a little thought. Qi Ba Ba said softly, "Now all we have to do is wait and see what the other party is thinking. But having said that, even if we don't do anything now, there will still be a lot of profits in our pockets, right? ?"

  Hearing what Zhong Shi said, everyone laughed.

  …

   "Did they make a move?"

  In the trading room of Sagittarius Fund, it is a bustling and busy scene at this time. Sagittarius traders are the most sensitive to abnormal fluctuations in the natural gas market. They are very clear about what happened and what they should do. Therefore, they have become the most active force in the market to attack undead positions since the early trading.

Although the income is quite high, there is no smile on John Arnold's face. He is very clear that there are still many variables. Although he and his allies have made some secret manipulations, they have destroyed the most possible help of the Everlasting Flower Fund. , but this does not rule out the occurrence of unexpected situations.

  As for the two "analysts", he sent them to the Caribbean Sea in the first place, where they will enjoy the sunshine for a whole autumn.

  After cutting off the back route of the Evergreen Fund, among the remaining issues, there is only one that Arnold considers to be the biggest threat, that is, whether Hu Ping's position will choose to close at this time. Although he believes that no one chooses to close the position at this time, years of experience tell him that things with a small probability do not mean that they will not happen.

   "No, Boss, it seems that they are thinking about it with us!"

Conrad Gore carefully observed the market, and finally said firmly, "The position of Everlasting Flower has collapsed, and this is a good time to take advantage of the victory and pursue it. No one will choose to close the position at this time. Rest assured Come on, boss, I believe they will make a wise choice."

"No! No!" Arnold shook his head again and again, and said, "I always have a hunch that the Withering Flower Foundation will survive this crisis, but since the other party does not close their positions at this time, they will not be able to come up with a specific psychological price. Wouldn't choose to close out. But if it wasn't for them, I don't know who exactly, oh my god, this feeling makes me sick, what the **** is going to happen?"

Hearing what Arnold said, Conrad also frowned. Although he basically didn't know anything, it didn't prevent him from making a thoughtful expression and showing a good attitude in front of the boss. employee attitude.

  …

   "Damn, what's going on now?"

After painfully making the decision to close the position, Nick knew that this act of blatantly admitting defeat to the market would inevitably lead to the collapse of the entire position, but he had no choice, and the debt collection calls one after another made him completely at a loss. Not even time to watch the market.

After finally convincing those clients who were chasing funds one by one, it was not long before the market closed in the morning. Although he had made enough psychological preparations, after hearing the specific figures of losses, Nick's expression was still involuntary. It darkened.

   "3.4 billion US dollars, this is the current loss amount!" Bond Hunter shook his head and said a number lightly. At this time, he was completely numb. Seeing the piles of numbers rising, his mood changed from the previous annoyance, regret, shock, and shock to numbness. When he said "3.4 billion U.S. dollars" , he couldn't even make a wry smile.

  The corners of Nick's mouth twitched rapidly. This number shocked him so much that his lips trembled for a long while before he could utter a word. After finally calming down his emotions, he continued to ask bitterly, "How much did you lose?"

"Not many, basically the big institutions in the market have not shown up, and they are still waiting to continue to collapse. Currently, there are only about 3,000 lots, all months." Hunter finally got a little expression, and after showing a self-deprecating smile, he He said bitterly again, "One morning, they beat down the price difference between March and April by as much as $1, so they are still not satisfied, so greedy."

  In fact, although the position of the Undead Flower Fund has not yet exploded, it is only one step away. However, no matter whether it is a broker or an exchange, their positions are very difficult, because the number is too many, accounting for as much as 40% of the total open positions of NYMEX. If they are forced to close at this time, I am afraid that all Avalanche-like declines will occur in the monthly contracts, which is definitely not what they want to see.

   "When it comes to greed, you're on par with them!"

After giving Hunter a meaningful look, Nick turned and walked towards his office. He faintly heard the phone in his office ringing again, thinking that he had to rack his brains to make various guarantees and promises to the other party. After the explanation, his head started to ache again.

   "Your greed is not weaker than mine!" Looking at Nick's back, Hunter countered not to be outdone. But at the next moment, he suddenly felt that this kind of quarrel was meaningless. He sighed, pulled himself together, and instructed the traders again how to close their positions.

  Perhaps, this is the only thing he can do now.

   "What, someone wants to buy our position, how is that possible?"

  Nick returned to the office and answered the phone numbly, but the first sentence the other party said shocked him so much that he didn't even have time to think about whether the news was true or not.

  Now, as long as he grabs a straw, no matter whether it can save his life or not, he will grab it with all his might. But even so, he was inexplicably shocked to hear that someone was interested in buying a position in the Evergreen Fund.

   "What, it's him?" After forcing himself to calm down, Nick began to listen carefully to what the other party said in the microphone, and his face began to change. After a full five minutes, the corners of his eyebrows and eyes gradually eased, and after taking a long breath, he said lightly to the other side of the microphone: "Well, let him send someone over to talk, I'm afraid it's too late now." It can only be this way."

  After hanging up the phone, he thought about it for a while, and suddenly thought of something, and rushed out the door immediately, shouting at the trading floor: "The situation has changed, don't close the position for now!"

  The traders who had finished trading in the morning were now walking outside in twos and threes, and it was time for dinner. Regarding the trading in the morning, they all looked dejected. It was really uncomfortable to know that the loss would continue. But after hearing Nick's yell, most of the traders looked up in astonishment, looking at their boss in puzzlement, with various thoughts floating in their hearts.

   PS: According to the public data, I found that no calculations are in line with the facts. Of course, I don't suspect that the report is untrue, but the problem is that I didn't understand it thoroughly, so I had to slow down and stop updating. I'm really sorry everyone. By the way, thank you book friend 140829195857889 for voting for the monthly ticket!

  

  

  (end of this chapter)