Winner Takes It All, Resurrection 2009

“Hello, I want to buy a short option for crude oil in the next year.”

In the account manager's office of the Union Bank of Switzerland, a West Asian and North African man with a gauze on his head took out a cash check and said, "Here is 15 million US dollars. Please buy all of it for me."

The account manager was secretly shocked. Although this was Switzerland, a paradise for the rich, such a large-scale option investment was still uncommon.

After all, options and futures are not the same. The leverage of futures is not that high, and they are greatly affected by current market fluctuations. Operators need to have extremely high financial talent to make money.

Options are completely a choice between two options. If you win, you will make a lot of money, but if you lose, you will not lose much. At most you will lose all your capital.

For example, the short option that customers want to buy now is to sign a one-year put purchase contract based on the current crude oil price of US$135 per barrel.

In the next year, as long as the crude oil price drops, customers can settle at any time and purchase it at the spot transaction price of US$120 or US$110 which may be reached at that time.

Based on a leverage ratio of US$1500 million, UBS can offer a maximum quota of 400 times, which is a US$60 billion crude oil purchase contract.

However, if such a large leverage is used, then for every 1% increase in crude oil prices, customers will have to add $6000 million in margin, otherwise they will face the tragic end of losing all their money.

Fortunately, the other party only required 50 times leverage, which means buying a total of US$7.5 million in future one-year bearish crude oil contracts, after carefully reviewing the other party's identity and the authenticity of the check.

The account manager couldn't help but ask: "Sir, are you aware of the risks? If the price of crude oil continues to rise by $2.6 from the current level, you will face the risk of losing all your principal.

We at UBS have the world’s best financial investment analysis team and have a good cooperation foundation with more than 400 mainstream futures markets around the world. As a professional, I have the need to provide you with the most professional advice…”

"Need not."

The visitor seemed reluctant to say too much. "I am fully aware of the risks. Please tell me if the deal can be completed immediately?"

As he spoke, he glanced at his watch impatiently. The account manager understood what he meant and knew that it was useless to say more. After checking the investment quota of the bank system, he nodded and said, "Of course."

If you have the money but don't make it, you're a bastard. This order is insignificant compared to the entire UBS. There is no need to even take it to the international futures market. Risk hedging can be achieved simply by trading within the bank.

This is another way for financial institutions to make money. In addition to earning commission income from financial investors, large financial institutions will also make money based on the scale of data from their own customers' two-way choices.

Perform internal hedging.

That is, for the same category and the same delivery date, for example, the current buy (long) order in 201401 (exactly one year) is 10 billion yuan in principal, while the sell (short) order is 8 million yuan.

Then any large financial group would choose to hedge the two $8 million buy and sell orders internally, and then take out another $ million to buy the corresponding excess orders in the futures market.

In this way, the commissions, fees and various taxes of the 8 million yuan of the two hedge settlements that did not enter the market will be directly taken away as the reasonable profits of the financial institution. Regardless of who wins or loses in the end, the bank will not lose money.

Of course, in the actual operation process, banks will also comprehensively consider the market development prospects. Once they perceive the risk of sharp rise or fall, they will personally intervene through the bank's proprietary investment department.

This avoids the risk of one party’s position being liquidated and the other party making excess profits.

What the account manager didn't expect was that today seemed to have disturbed the nest of options and futures investors, and many financial institutions, investment banks and funds with which they had cooperated for a long time came to him.

All the orders thrown out are sell short.

Countless investors waving checks also flocked in, most of whom were shorting.

The surge in short-selling orders was quickly reported to UBS's top management, and the board of directors held an emergency meeting.

The chairman of UBS came in person and asked, "How many short-selling orders have you received now?"

The vice president in charge of major customer investment wiped his sweat, "The investment principal exceeds 16 billion US dollars, the financial leverage is close to 1000 billion, and there are still a large number of orders that have not entered the review stage."

One director asked in panic, “What should we do?”

The chairman of UBS waved his hand and said, "We will accept it first, but we need to slow down the signing process. We need to send someone to find out the situation and see if we are the only one or all of our peers have received huge short-selling orders."

It’s a big group, what hasn’t it encountered?

Not long after, news came that many financial institutions next door, including the Union Bank of Switzerland and the First National Bank, received huge short-selling orders at the same time.

The chairman of UBS began to look serious. "This is a premeditated large-scale speculation. What about other peers, such as Deutsche Bank, Paris and London?"

The vice president replied with sweat dripping down his face, "We are still communicating. I believe there will be news soon."

They are still investigating, but they don't know that the entire front line of European and American financial institutions is in chaos.

Because Ou Meng, Dongda, Jiaobenji, as well as large funds and international hot money that saw the coexistence of risks and opportunities in the high oil prices, have all begun to exit the market one after another.

At first, it was the shell funds controlled by Qingyun Group and its friendly companies, shadow investment banks, and successfully packaged individual investors who were looking for financial institutions that could place orders around the world.

But these institutions are not fools. The sudden increase in existing short positions in a certain period of time (not only Dongda Capital is building positions, but other allies are also secretly building positions) made them keenly aware that there might be big moves in the crude oil futures market.

Some bold financial institutions began to follow suit and try to build positions, which led to the saturation of crude oil short-selling order business among financial institutions in Asia, Africa and Latin America, because there were not so many new long orders in the market.

Whether it is options or futures, you have to have a counterparty to enter the market, and financial institutions cannot rush into the mainstream futures market to conduct real transactions before they figure out the specific reasons.

After all, everyone knows that Wall Street has been openly and high-profile in its long positions. If one rushes in and shorts on a large scale without figuring out the whole story, Wall Street will use its financial and information advantages and control over resources to play tricks on them.

For example, if production is reduced, and a new growth point in energy demand emerges somewhere, which then drives up oil prices all at once, what should we do?
It's not impossible. After all, the price can fall after it goes up. However, the money remains the same money, but the ownership will change.

Individual financial institutions dare not gamble at all. Now the general trend is obviously to continue to rise steadily. They would be crazy to invest a large amount of money to short sell. Who will be responsible if they suffer a loss of position?
Therefore, on the one hand they raised the margin ratio for customers, and on the other hand they reduced the leverage ratio. However, this time the short sellers were so aggressive that they didn't care about the mere ratio at all. As long as the financial institutions were willing to sell, they would sell out in minutes.

The financial markets in Asia, Africa and Latin America are not mainstream to begin with. Once they became like this, they instantly became nervous and began to actively save themselves. They wanted to make money but were unwilling to take responsibility, so the scale of subsequent short selling suddenly dropped.

With nowhere else to go, the funds had no choice but to go directly to Europe and the United States, and no financial institution was spared. In the words of Li Zehua, "If you buy, you will earn. Don't worry that the financial institution cannot afford to lose.

There is no need to worry that they will default on their debts. This time, several major economies are acting jointly. Even if Wall Street dares to go back on its word, it will depend on who has invested more in whom and whether this will break the rules.

Who will dare to play with him in the future? "

Therefore, after determining the time for the initial large-scale entry into the futures market, all parties acted together, especially the large financial institutions, selling as many short contracts as the quotas released.

The parties who controlled trillions of dollars of funds didn't care at all. By the afternoon, they almost came out in full force, blocking the windows of any financial institution they could find, waving money to buy any short orders.

The financial institutions communicated with each other and found that something was wrong. This was the prelude to a large-scale organized attack!

After the information from all sides was summarized to Wall Street, more than a dozen original shareholders of the Federal Reserve gathered together in an instant to discuss how to deal with the crude oil futures war!
Yes, war!
In the mobile Internet era of the 21st century, no one is better informed than Wall Street. There has long been various evidences showing that a huge hostile force is secretly connecting the layout of crude oil futures.

Now is the moment when the truth is revealed.

With the participation of the world's top economic analysts and financial operators, a comprehensive plan was quickly formulated, and Wall Street was already on high alert. They wanted to see which old friends could not hold back and tried to challenge America's financial hegemony.

Anyway, there are only a few companies in the world that can compete with American capital. They are either Oumeng or Dongda, and at most there is Chicken White Elephant and some sovereign funds that are not afraid of death.

No matter who comes, American capital is confident that it can defeat him.

But what they didn't expect was that this time, it was all.

Almost every consumer country suffering from the extremely high crude oil prices has united unprecedentedly and is ready to fight against the oil-producing countries led by the United States.

This is not a competition in crude oil futures itself at all, but an all-round war against crude oil exporting countries.

For example, when Qingyun’s first billion-yuan short-selling order was executed in Switzerland, several Southeast Asian economies sent notes to big investors and big cats, stating that they would send high-level representatives to the economy in the near future.

Multilateral negotiations will be conducted on the contract for future crude oil production and prices. If conditions that satisfy all parties cannot be reached, then the next step will be the oil-producing countries' investment in consumer countries.

Sorry, as a reciprocal retaliation, they will impose high taxes on projects invested by oil-producing countries in order to regain the excess profits extorted by high oil prices.

At the same time, Oumeng was also attacking everywhere, focusing on big cats and Northern Europe, as well as several world-class energy companies, including large groups such as Shell and Royal Petroleum of England, all of which received inquiry letters.

It means that various economies will make major adjustments in the energy sector. If the above-mentioned economies and enterprises cannot meet Europe's future needs, then unfortunately, various economies will impose excess profit taxes on the energy industry.

As per usual practice, Dongda University recalled the heads of the three oil companies to Yanjing to discuss countermeasures.

For a time, the global energy market was shaken. At the same time, huge amounts of funds amounting to tens of billions of dollars began to flow into the spot futures market.

The 201301 contract, even with the layers of defense built by American capital, still plummeted by US$3.5 in five minutes, falling to US$131.6 per barrel.

Wall Street then launched a counterattack and briefly regained the $132 and $133 levels, but as more and more forces joined the short side, Wall Street was unable to keep up.

But neither side dared to take a step back, and the huge amount of funds was between 132-133, and the fight was fierce.

Financial institutions everywhere are still receiving a steady stream of short-selling contract orders. It is impossible not to make money when doing business. Moreover, crude oil prices have been at a high level for a long time and now have ample room to fall.

They are not fools and understand that someone is leading the charge. If US capital does not respond properly and fails to interrupt this trend in time, then a decline will be inevitable.

Therefore, based on the idea that it would be a fool not to make money, various financial institutions began to adjust their crude oil futures investment strategies and started to sell following this huge amount of funds.

The larger the position held in the spot market, the greater the risk that the financial institution needs to absorb (conversely, if successful, the profit will also be very considerable), but the financial institutions are in the business of guaranteed income regardless of market conditions.

They are simply unwilling to take excessive risks, so they can only relax restrictions and continue to receive short-selling contracts from investors. However, what they did not expect was that the number of short sales was increasing.

The original intention was to hedge risks and transfer hidden dangers to funds, institutions and individuals. They only earn commission income and it is a guaranteed profit.

Unexpectedly, the number of short contracts sold far exceeded expectations, and the short positions they held in the open market were not enough to compare the overall size of these contracts.

In order to avoid systemic risks, they have no choice but to invest their money in the spot market, which results in the short sellers attacking crude oil futures becoming increasingly powerful.

Offline, major financial institutions also panicked and rushed to use various channels to sell the long contracts that were popular in their hands, in order to appease some greedy and reckless ambitious people.

It is better than buying all the spot and taking huge risks. After all, when there are short sellers, there are long buyers. The strength of Wall Street should not be underestimated. For many years, they have dominated the rise and fall of the financial market.

The limited losses were all caused by internal unrest, but this time traditional American capital still invested hundreds of billions of dollars in shale oil projects, and the core interests of the two companies are tied together.

The cost of shale oil extraction is extremely high, and traditional US capital must maintain high oil prices to make a profit. As a result, in the eyes of many people, US capital is unprecedentedly united, and foreign short-selling funds are simply seeking their own death.

But they don't know that traditional American capital has long been dazzled by the huge profits from Venezuelan energy, Samba food, and South American minerals, and can also obtain a large amount of benefits from Southeast Asia.

Wouldn't it be more profitable to gain control of Qingyun's business in Europe and the United States than to cooperate with Wall Street?
You have to know that Bank of America and the California Consortium have just allocated the first $15 billion in loan funds for the South American transportation artery, and all of them are working to regain the bargaining power and control over the world's energy, food and mineral resources.

These had previously been in the hands of Jewish capital groups and were completely different from Ansa Capital. California Capital and Texas Capital hit it off and took action.

After half a year of full communication and exchange of interests, peripheral economies such as Dongda and Oumeng finally reached a preliminary consensus, including a large number of economies such as Jiaobenji.

In fact, it is on the verge of collapse.

There is no way. Not all economies have the strong foundation of the University of Tokyo, which cannot achieve leapfrog growth in the domestic economy by spending hundreds of billions of dollars in additional spending on mineral, food and energy businesses every year.

According to preliminary estimates, Tokyo's GDP growth rate in 2010 once again exceeded the historical data of 2007 (a little over 14% that year), making it the first country in the world to escape the impact of the financial crisis.

In 2011, due to the initial success of industrial upgrading and the complete opening up of the consumer market in Southeast Asia, Dongda continued to maintain the miracle of economic growth of over 15% for two years.

Not to mention 2012!

This year marks the final year for Dongda’s industrial upgrading, including previous investments in semiconductors, chips, lithography machines, new materials, large-scale infrastructure, and large-scale precision processing manufacturing.

As well as Internet finance, Internet hardware and software began to explode in production capacity as a whole, and the overall strength once again achieved a leap forward, successfully reaching a new level.

17.5%，一个经济整体规模超过56.5万亿软妹币的奇迹（10年42多万亿增长15%以上，到11年48.3万亿基础上再增长17.5%）。

From the end of 09 to 12, in just three years, the overall GDP grew by more than 50%!

According to this trend, it is expected that by the end of 2013, the economic miracle of doubling the total scale within four years will be achieved.

Not only did it scare other economies around the world, it also shocked China internally. With the new fifteen-year plan for intelligent manufacturing in 2013, it will be widely used in new energy vehicles, photovoltaic industry, large-scale basic raw materials, special materials, and agriculture.

Driven by many core pillar industries such as finance, the Internet, etc., Dongda will maintain a high-speed growth trend in the long term, especially in South America and Southeast Asia, as well as the future supply of cheap minerals, grain and crude oil from West Asia and North Africa.

It will provide a solid foundation for the economic development of Southeast University.

Even so, the University of Tokyo cannot withstand the additional cost increase of several hundred billion US dollars each year, not to mention the European economy that is on the verge of death due to the European debt crisis. China is also trying its best to reduce the cost of industrial production.

If prices don’t fall, the global industrial consumer goods market will be swept away by Dongda’s capital.

Wall Street is so unlucky. It wanted to make up for itself by eating up Europe and attempted to destroy Europe's industrial base with energy prices, but it ended up nurturing another more terrifying opponent.

Now Ou Meng can't bear it anymore and wants to turn the table. Wall Street must make certain compromises. If it wants to lower the price of crude oil, it will have to face another rising economic giant.

It's really a one-track mind. No matter what the US capital does, it will be the difference between dying early and dying later. If they continue to maintain high oil prices, Europe will surely die with the US capital before the economy collapses.

The relaxation of price controls would make the University of Tokyo laugh to death, because not only can short selling make a fortune, the conservative estimate is that the profit is hundreds of billions of dollars, and the lower oil prices will in turn spread the cost of industrial production.

Dongda's products, which have greater international competitive advantages, will sweep the world in an instant!
(End of this chapter)