"No, I speculated in futures! Do you have any cigarettes? Give me one!"

Julian's back suddenly leaned against the back of the seat, and his expression that was originally struggling suddenly became much calmer...

"Why are you telling me this now?"

The news that Julian was sure that he had indeed bought the silver futures contract hit Carter's heart like a thunder.

Carter didn't know what kind of emotion he should be feeling now.

There is confusion about Julian's confession at this time, there is pain at being betrayed and trust betrayed, and there is regret for being naive...

Carter couldn't find a suitable adjective to accurately describe the emotional fluctuations that were so complex. The only thing he could be sure of was that when he handed the cigarette to the other person, his hands were shaking...

"After all, paper cannot cover the fire! The objective facts will not disappear from this world because of my avoidance. Maybe you will never remember this matter, but, what if, what if?

When did you suddenly think of it?!"

The burning fireworks were dazzling. After the scarlet fire shone for a while, it was followed by a puff of thick smoke and quietly turned dim...

"This matter is like a thorn in my chest. I originally planned to tell you next year, when you graduate from high school, and after Tiger's first year's income comes out, but just now, you

But it mentioned the two sides of human beings..."

"I feel that if I don't make this question clear, I won't be able to answer your question."

Also lighting a cigarette for himself, Carter looked out the window without speaking. He continued to listen to Julian's explanation to himself...

"You should know me well. I am old and have family constraints. Since I started working as a stockbroker at Kidder Company, I have been a stingy guy who only dared to focus on low-priced stocks.

Damn it, you asked me to speculate in futures, I’m afraid!”

"If you make money in futures, it is certainly an exciting and good thing. But if you lose money... what will happen to my family? What will happen to my children?! Not only can I not bear the risk of losing money at that time, but neither can you...

"

"But you still speculated in futures, didn't you?"

Julian's words reminded Carter of the scene when the two met for the first time:

"My early investment methods were a bit...well, stingy? I used to particularly like to look for low-priced stocks. Although the profit cycle is a bit slow..."

At that time, the slightly embarrassed expression on Julian's face and the somewhat awkward reaction all seemed so natural. Even at the beginning, his frankness was part of why he chose him...

However, this cannot be the reason for his black money!

"Yes, I did speculate in futures. But I didn't buy many futures contracts... I spent 340,000 US dollars to buy futures contracts, but I spent more than 1.6 million US dollars on risk hedging.

!”

"Based on this money, as well as my house as a mortgage, and even some of my clients' stock securities, plus borrowing from relatives and friends, a total of about 6.5 million US dollars was borrowed, for a total of 8 million US dollars. Then use

This money was used as a guarantee, and a large amount of silver spot was borrowed to hedge against the risk of falling silver futures. Then, as you all saw, I suffered a huge loss on the spot!"

Risk hedging?!

Carter didn't quite understand what Julian meant for a while, what about spot and futures hedging, and his mind was in a mess. Fortunately, he seemed to know that Carter didn't understand this, so Julian immediately explained:

yy

"The borrowed silver spot is to go short and reap the profits from the decline; the futures are to go long and reap the profits from the rise, and at the same time perform reverse operations on the related underlying, thereby avoiding unilateral risks."

"When I bought $340,000 in silver futures, I simultaneously sold $8 million in spot silver. In other words, while I bought 1.7 million ounces of silver futures for $340,000, I sold 72

More than 7,000 ounces of silver."

"Later, when the silver price rose to 23 US dollars an ounce, I could make a profit of about 20 million in futures. But accordingly, I lost money on spot prices. I had to use 23, 24, or even as high as 29 US dollars an ounce.

At the price, I purchased more than 740,000 ounces of silver to close my short position. In order to close this short position, I spent more than 18.8 million. The final actual profit was actually only 110,000.

More than ten thousand..."

"Wait a minute, you bought 340,000 silver futures, and in order to balance the risk, you shorted 8 million in silver?! Isn't this a bit of a fuss?"

The logic in Julian's words is not difficult to understand. To put it bluntly, it is hedging his bets.

I bet that you will go up and I will bet that you will go down! Just like when rolling dice, I bet on the odd and even numbers at the same time. No matter what result you get, I will always make a profit and a loss.

As long as the interest rate difference between the two is positive, you will make money!

The logic of this thinking is not difficult to understand. But when he was sitting in the car and had no way to take out a pen and paper to check the calculations, Carter instinctively felt that the gap between the two values ​​was a bit big when he just listened to the numbers.

It's like, suppressing the odd and even numbers equally. Shouldn't the logic of normal people be, almost the same? Then, slightly tilt the proportion on the side that you think is more likely to avoid the embarrassment of breaking even every time.

situation.

So at first glance, 340,000 versus 8 million, this...

"Haha, for me back then, this was a big gamble! If it weren't for my qualifications, I might have borrowed more..."

Julian chuckled, feeling that Carter was talking more, and knowing that Carter had listened to his explanation. As for whether he could accept it, or whether he felt relieved, it was hard to say, but at least the communication channels were smoother than before.

More...

"Carter, you have to know that for short sellers, they have to face limited profit margins and unlimited loss risks! For example, the silver spot sold at $11 per ounce, even if the silver price drops to infinitely close to

0, my profit is only a fraction of US$11 per ounce. Calculating the profit of US$11 per ounce, the final profit is only over 7 million."

"As for futures, based on the silver futures margin of 1,000 yuan at that time, 340,000 US dollars was enough for me to buy 340 contracts. One contract was 5,000 ounces, and the total amount was as high as 1.7 million ounces. Assuming that the silver price fell to the same extent.

, my loss will reach more than 18 million US dollars. Even if there are profits from spot short selling to make up for it, the difference will still be as huge as 11 million US dollars!"

"So for me at that time, using $8 million to short silver spot to hedge long $340,000 of silver futures was already a risk. Of course, my operation was also flawed, and the timing of closing the position was not well balanced.

, otherwise the profit should be more than one million..."

"In short, this is the situation. To be honest, at the time, I didn't think it was necessary to tell you these things. After all, you were just one of my many clients at that time, even though in comparison, you were

There is essentially no difference between high-quality customers."

Carter was a little silent when he heard this. Indeed, the relationship between himself and Julian at that time was not as close as it is now. Even if he was deliberately trying to trick him, it would not be a surprise.

As for my subjective feelings of indignation and anger, they are all my own. What does it have to do with him? What does it have to do with the entire Wall Street environment?

Wall Street is a place where talent cannibalism is the norm...

"What happened next?"

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Chapter completed!