minus
“An analysis has come out that it is advantageous to focus on the shot as aggressively as possible. In particular, let’s focus on WTI (West Texas Intermediate Oil) delivery in May.”
One morning in late March, Hugo Washington, chief market strategist for oil futures, was giving traders guidance.
“Do you think it’s gone down enough now?”
The oil futures price has been steadily dropping from the $78 level in 2018 and was already hovering around $35 at this point.
The market seems to regard this as the Maginot Line.
Even now, if the price of oil is already lower than this, there is no reason for the producers to pump up the oil any more.
Since the guidelines given above are quite far from what the market expects, it is only natural that such a question arises.
“Economic activity in each country has contracted due to the corona shock, and the tourism industry has come to a standstill. There is no reason for airlines to fly. It is analyzed that oil will remain for a while.”
Hugo Washington also kindly explained the questions of new traders from the East.
“Then to what extent are you watching?”
Even the trader who asked the question has considerable confidence in the judgment above.
At least so far, there has never been a single case where the guidelines have gone too far.
I’m just asking questions to get a better understanding of the situation.
It goes without saying that the more you know about the product as well as the other things, the more advantageous it is to move a whopping $100 million in volume even for a newbie.
“An analysis has been made that there is a possibility that an unprecedented situation that may lead to negative is possible. It seems that this corona crisis is much more serious than everyone thinks.”
“Oh My God… … .”
The pessimistic words that came out of the market strategist’s mouth caused swear words everywhere.
What the hell is going on if oil prices go negative?
“WTI negative?”
“okay. WTI.”
It is not unheard of for crude oil prices to fall into negative territory.
In the case of oil or gas, a considerable amount of cost is incurred even for production and storage, so there are cases in which the purchaser pays the price rather than the purchaser.
It has only happened a couple of times, either in extremely low-quality crude oil, or in very unusual cases where there is a problem with the pipeline.
However, it is difficult for anyone to imagine that the trading price of WTI, the most traded in the US, will go down to negative.
“The economic situation is getting worse, and Saudi Arabia and Russia have failed to negotiate production cuts again. Eventually, the amount of crude oil produced will increase and consumption will contract extremely, so the price is not at the bottom right now.”
“Even so, isn’t it quite dangerous to look at the minuses and attack?”
“Of course there are risks, but I think it’s well worth it.”
Hugo Washington replied with a grin. And most of the traders shone with a similar smile.
Once again, it seems that something extraordinary is about to happen in the market.
No one is afraid of gambling among the people gathered here.
Such a person would not have entered the terrifying trading market of 100 million dollars by himself.
After the market strategist announced the guidelines, the traders began to busily take their positions in their respective places.
Based on the criteria given above, they create a structure that can produce the best profit by mixing futures and options according to their respective strategies, and start to build positions.
As always, everyone is full of hope. After this attack is over, the general public will probably be able to get a profit that can only be touched for the rest of their life.
And the guidelines that came down from above have proven their accuracy once again.
As we entered April 10, the oil futures price started hitting $20, and by this time the oil futures team was already making record profits.
* * *
“okay. I’ve been crazy busy. How about you?”
One day in late April, as usual, after having a light lunch with a sandwich, Kim Hyun-chul was looking at the monitor and talking on the phone with a Korean acquaintance.
It is already past midnight in Korea.
An old colleague who works at a Korean securities company called and said he couldn’t sleep, so we were taking a break and talking.
“Is that there too? To do… … They say that Korea is the second largest market after New York these days.”
The person Kim Hyun-chul is talking to is also a person who works in a similar job.
I heard that Korean ants are more eager to invest in foreign derivatives than ever before.
It is said that more than 4,000 trillion won was traded in last year alone, so it could be said that it was a craze indeed.
Of course, the size of the loss is also large. The ants were losing as much as 1 trillion won each year.
– It’s all because of you, Chairman Kang.
“Why is that because of our boss?”
– Isn’t it obvious? It was the oil gift that Chairman Kang first hit the jackpot, right? That’s why people think oil futures are a real hit. This year is different from last year. Oil prices have gone down tremendously. So, everyone seems to think that if they enter this area, they will make a lot of money.
“uh? uh… … .”
Kim Hyun-cheol paused for a moment at the words of his opponent. If you think that the oil price is at the bottom right now and buy it, you will definitely see blood.
Moreover, derivatives can be invested with only a small margin rather than the full amount like stocks, so if you make a mistake in your judgment, you will incur large losses.
One oil futures contract is 1,000 barrels. At the current price, it is around $20,000, but you can invest in one contract with 2 million won of trust margin.
Also, if you use leverage, you can again invest at 1/10 of that cost.
Of course, if you use such leverage, you will blow up your margin with just a 1% rebound.
As the guideline given above, if the oil price really approaches negative, most Korean ants will lose their investment.
However, Kim Hyun-chul can’t express himself. There is no reason to disclose the company’s secrets, and it doesn’t happen in a day or two for the ants to go out at such a loss.
– We’re not sure yet. Who the hell knows where the floor is? But ants are very daring. Once you get into something, you invest without looking back.
“That’s it. Derivatives are never easy.”
– To be honest, half of people like us are at a loss.
A trainer who belongs to a securities company or an asset management company does not mean that they do not incur losses.
Even if the odds are not very different from those of ordinary people, it is not too wrong.
However, professional traders have the ability to minimize losses.
– What do you think? Is New York a good place to live?
“What. so so.”
Kim Hyun-chul, who worked at Seoul Securities, moved to New York a year ago.
The investment company run by world-renowned investor Kang Yu-jin applied faster than anyone else when he said that it would expand Korean employees, and thanks to his experience, he was able to join without too much trouble.
Life in New York was satisfactory. It was a well-known fact that housing and living cost were higher than in Seoul, but the salary more than doubled and the bonus was greater than the basic salary, so it goes without saying that the economy was much more affluent than before.
I told my old colleague it was okay, but in fact I was able to enjoy life much more than I did in Korea.
– How are you doing? I was very excited. I saw the picture you posted on social media. You’ve got a bunch of nice white girls by your side.
“haha. When I go to a pub, I am a little popular.”
– What’s popular? Are you proud of your company there? That’s why there are so many women.
“No, what. That doesn’t mean I can’t say I don’t go. Heh, that’s true. When I went to my company and said that I was from Korea, everyone was completely blown away. If you’re from the same country as the boss, you seem to think there’s something.”
– I am. Then yes. what are you
Kim Hyun-chul is furious at the reaction of his former colleague. Of course, it wasn’t really outrageous, it was half laughter.
“What am I doing? Human Kim Hyun-chul was also popular in Korea.”
– You’re talking about popularity. under! That’s funny. Being Korean in America would be helpful.
“So, think about it too.”
– I heard that New York is expensive… … I don’t know if there will be anything left after I go and pay the rent.
“It’s useless. I don’t even have to worry about rent or anything like that.”
– but. Do you get quite a bit too?
“It’s better than being there. Because the operating amount is wrong.”
– how much? Did I say 100 million last time?
“It has grown to 200 million dollars this year. Because last year’s achievements were fully recognized.”
While working as a prop trader in Seoul, Kim Hyun-cheol’s operating amount was KRW 20 billion. And the target monthly profit was 70 million won, and the loss limit was 200 million won per month and 500 million won per year.
But when he moved to New York, the amount deposited with him was $100 million from the start.
This is an amount that cannot be compared to the amount of 50 billion won for senior and deputy general traders in Seoul.
– 200 million dollars? and! Then the incentives aren’t a joke, are they?
“right. After all, nobody here cares about salaries.”
Not all numbers are greater than when in Korea. At Seoul Securities, about 20% of profits were received as incentives, but only a much lower percentage of incentives are guaranteed here.
However, because the strategy from the top is so accurate, there is almost no loss, and the actual amount of money in hand is incomparable due to the large amount of profit.
– Oh really. Shall I go too? Whoa… … If it weren’t for my kids, I should have gone with you when you went.
Of course, it is not easy for people with families to move their bodies compared to singles.
“Even if it’s only you, come over first. Can’t we just sit down first and let the family cross over slowly?”
– Yes, but. But am I okay with what I do?
“then. It’s also very easy if you have the skills.”
Whereas strategic trading, which Kim Hyun-cheol is responsible for, secures a position until the expiration date of the product and uses a mid- to long-term strategy, Joo-won Oh, a currency counterparty, is a day trader focused on short-term management and has a very different field from each other.
In the case of a small office where funds are not abundant, the proportion of low-risk day traders is high, but it is true that the place where Kim Hyun-cheol works is much smaller than that of strategic traders due to the limitations of day traders.
But that doesn’t mean there aren’t day traders.
– Your side mostly follows the guidelines, isn’t the day trader cold?
“Not at all. There are guidelines, so it’s easy to work with. It’s a matter of how much money you make.”
– I see. I guess I’ll have to give it some thought. If you’re going anyway, wouldn’t it be better to go before the kids go to school when they’re older?
“Of course. Then you know that you are doing it and report it.”
Kim Hyeon-cheol welcomed an old colleague to join.
– Anyway, you can enter even if you go in when this corona calms down a bit.
“Well, yes. Well, how long will it last? It will be resolved soon.”
People still haven’t noticed the fact that the dark period caused by the corona is just the beginning.
“Huh? I can’t. Prices fluctuate. Let’s hang up.”
– okay? okay. look at work suffer
Kim Hyun-chul hurriedly hung up the phone and began to look at the monitor. Something unusual was happening.