The Rebirth of the Financial Hegemon

The weekend is always something to look forward to.

Whether you are an office worker or a student, you have been looking forward to the weekend since Monday.

You can take a break from the busy study and work on weekends.

Go shopping, sing, or make a date with your boyfriend and girlfriend for money.

However, for participants in the futures market, they don’t even think about the weekend for a minute.

The capital game from Monday to Friday may be the most fascinating game in the world.

That nervous heartbeat, the pleasure of making huge profits quickly, the feeling that you can buy everything.

That feeling is enough to make you addicted.

Anyone who has watched drug rehabilitation documentaries should know that there is a professional name for addiction called withdrawal reaction.

It talks about the various reactions that people who are addicted to drugs will have due to physical and psychological discomfort during detoxification.

Therefore, for traders, every weekend, they will feel empty in their hearts.

That feeling was simply torture.

For those who hold positions in the futures market, this weekend is even more difficult than past weekends.

At five o'clock on Friday evening, the Suzhou Exchange issued an announcement.

For the delivery of red adzuki beans in the market outlook, mixed delivery of old beans and new beans will be prohibited.

This is a very common message.

There are only a few words, so simple that it is clear at a glance.

But such an ordinary piece of news shocked many people.

The futures market is derived from spot prices.

The modification of the delivery standards means that the amount of red adzuki beans that can meet the delivery requirements is reduced.

At the same time, this also means that the registered warehouse receipt of the spot merchant may be invalid.

Register warehouse receipt.

When the spot merchant delivers the goods that meet the delivery standards to the exchange's delivery warehouse,

After the delivery warehouse passes the inspection, a standard warehouse receipt will be issued to the holder of the goods. The holder of the goods can take the standard warehouse receipt to the delivery department of the exchange to go through the registration procedures.

The warehouse receipt formed after completing this process is a registered warehouse receipt.

Theoretically speaking, spot traders are born short.

Because the spot goods in the hands of spot dealers need to be sold, but the market itself has disorderly fluctuations of systemic risks, in order to avoid losses caused by such disorderly fluctuations, hedging can be used to hedge against the unstable risks of the market.

Hedging.

In the spot market and the futures market, the same type of commodities is purchased and sold in equal quantities but in opposite directions at the same time.

That is, while buying or selling physical goods, the same amount of futures is sold or bought in the futures market.

After a period of time, when price changes cause profits and losses in spot trading, the losses in futures trading can be offset or made up for.

Thus, a hedging mechanism is established between "current" and "period", and between near-term and forward-term, so as to reduce price risks to a minimum.

Theoretical basis of hedging.

Spot and futures markets move in the same direction (under normal market conditions) because both markets are affected by the same supply and demand dynamics.

Therefore, the prices of both rose and fell at the same time.

However, since the operations in these two markets are opposite, the profits and losses are opposite. The profits in the futures market can make up for the losses in the spot market, or the appreciation in the spot market is offset by the losses in the futures market.

For example, the spot dealer of red bean.

The spot price of red adzuki beans in November was 3,000 yuan per ton, and a spot dealer was quite satisfied with the price.

But spot sales cannot be completed in one day.

The spot dealer was worried that the spot price might fall and reduce profits. In order to avoid the risks caused by future price drops, the spot dealer decided to trade red adzuki bean futures on the Suzhou Commodity Exchange.

Take the spot dealer who has 30,000 tons of spot stock as an example.

The standard red adzuki bean futures contract is a standardized contract of 10 tons, so the spot merchant only needs to sell 3,000 short orders to lock the price of red adzuki beans at 3,000 yuan per ton.

If the subsequent futures market price rises, then the spot in his hand will also rise. If the futures price falls, then he can make a profit on the futures to make up for the loss on the spot.

But now, the exchange has suddenly changed its trading standards, which means that all the registered warehouse receipts previously registered by spot merchants that were adulterated with new beans and old beans are invalid.

That's okay.

For spot traders, the futures market is used to hedge risks.

The sales contracts in their hands are to avoid the risks caused by falling prices.

Now that the registered warehouse receipt is invalid, it means that the spot goods in the hands of the spot dealer cannot be delivered.

If you want to make another delivery, you must take out enough spot before delivery.

Otherwise, the arbitrage position in the hands of spot dealers will become a purely speculative transaction.

After the exchange news was announced, all spot traders were stunned.

Where can I get enough stock in such a short time?

That night, spot dealers involved in hedging blocked the door of the exchange.

They need an explanation.

How can we change the rules that have been set long ago?

The exchange finally gave an answer.

This decision was made after research by the exchange’s research department.

But spot traders don’t know that the exchange is actually in a difficult situation.

Because, after the exchange closed in the afternoon, it received a call.

A call they simply couldn't resist.

The outcome has already been determined.

Now that the exchange announcement has been posted, it is naturally impossible to choose to change it.

Therefore, spot traders can only accept this fact.

The only thing they can save is to hedge their hedging positions after the market opens next week.

A short two-day weekend seems as long as ten thousand years to many people.

No one knows what kind of trend Hongxiaodou will be after the market opens next week.

Finally, two days passed.

But when the market opened on Monday, everyone was stunned.

The Hongxiaodou 9602 contract opened at a price of 4,161 yuan.

It jumped a full 272 points.

Open directly at the highest price of the daily limit.

On the buy-one market, hundreds of thousands of buy orders were piled up.

That's a number that would make any short seller despair.

Under such a large order closure, no short position can be closed.

In other words, people who have made short orders now have no chance to admit their mistakes and stop losses.

Inside the main room of the exchange.

Huang Binsen sat on the sofa with dull eyes.

The price of 4161 was like draining all the blood from his body.

The sudden explosion of losses on his books made him collapse.

He knew he was doomed.

With a 180-degree straight line, reading the market has no meaning.

Facing the meaningless computer screen, Huang Bingsen almost thought he was dreaming.

A huge loss of more than 600 million.

This kind of loss made Huang Binsen suspect that he was dreaming, or was it the kind of nightmare that he could never wake up from.

Suzhou is cold in winter.

But Huang Bingsen's heart was colder than the weather outside.

In the daily limit where hundreds of thousands of buy orders were sealed, Huang Binsen could not feel any warmth.

Such a huge loss has exceeded the limit he can bear.

Facing Hong Xiaodou who had sealed the daily limit, he could no longer even escape.

The deep self-blame and regret made Huang Bingsen feel as if a pair of big hands were tightly strangling his neck.

His eyes were lifeless, staring straight ahead as if dead.

In another large room, the floor was littered with smashed computer fragments.

Yuan Baocheng was furious and was frantically destroying everything in the room with a stool.

The traders hid in corners one by one, lowering their heads and not daring to speak.

This time, Yuan Baocheng was tricked.

In less than a month, seven to eight billion were lost.

Such a level of loss was enough to strain Yuan Baocheng.

What made Yuan Baocheng even more angry was that this time he was tricked by friendly forces.

In Yuan Baocheng's view.

In all likelihood, Hu Hansan and the Huang family were deliberately plotting against him.

No one but these two companies could sell such a big short order on Friday.

Even the sudden modification of the exchange rules is most likely a good thing done by these two companies.

"Hu Hansan, Huang Bingsen, wait for me!"

Hu Hansan, the biggest main force on the short side.

Such as mourning an heir.

He stopped asking traders to close their positions.

At this time, there is no point in closing the position.

The daily limit means that no one's short position can be closed.

Even if you queue up and lose one or two hands, what's the use.

With a loss of up to one billion, nothing can be done to save it.

The main short sellers on Hongxiaodou all look like their dead mothers, not to mention the retail investors who are short.

In this kind of daily limit where even escape is impossible, everyone looks like a drowning man who is about to drown.

Those who were short at Friday's daily limit have already incurred huge losses.

As for those who were short in the early stage, they even had short positions.

Wearing a position is not a liquidation.

To put it simply, those who were idle for the first two days, in addition to losing all their principal, are now in debt.

And no one knows how much this debt will be.

Under the extremely violent market conditions, the exchange was much quieter than usual.

The market situation has made short sellers completely desperate, and those with short positions are no longer in the mood to talk.

Only those speculators who have done too much are in high spirits.

"Haha, look at these stupid short sellers. I told them not to do short selling in this kind of market. They have been shut down now."

"Old Sun, didn't you say that if it rises too much, it will fall? The hat you grabbed on Friday feels good now."

"Get out of here, don't bother me. I'm in trouble."

"Hey, don't bother me. I'll invite you to Baiyuan Garden to try the first-class flavor tonight. I tried it last night. It's so tender and juicy, tsk tsk..."

"Get lost."

"Hey, damn it, I didn't dare to leave every other weekend. I ran away last Friday, otherwise I would have made twice as much money now."

"Come on, I was washed out at the lowest point. Just be content with making money."

"Damn it, I obviously thought too much, but I didn't make any money."

"Isn't it? How often do you encounter such a good market, but you don't make much money."

"Just be content with the money you make. Fortunately, I ran fast on Friday, otherwise I would have had to jump off the building now."

"Yeah, if the daily limit can be sealed today, these short sellers will be in misery."

"..."