Chapter 169: Keep Buying!

Futures and options.
These two things, to put it nicely, are financial derivatives, sophisticated tools for big capitalists to hedge risks.
To put it bluntly? They're legal casinos in the financial markets.
This place has no code of honor; it's a naked "zero-sum game."
What is a zero-sum game?
Simply put, once you're at the table, either you get wiped out, or I go bankrupt; one of us has to be carried off.
Therefore, in this bloody hunting ground, lone wolves can't survive.
To survive, you have to form gangs, team up, and play like madmen.
They lay a trap, then target an unlucky player's position, and everyone swarms in, tearing them to shreds and devouring them.
How many people have lost everything in this game, dying without ever knowing who shot them in the back?
Even more thrilling is the exchange's tenfold leverage, allowing you to leverage ten dollars' worth of shares with just one dollar.
This means your profits can skyrocket, but your losses can send you plummeting to the Earth's core.
The occasional news report about someone who lost millions arguing with brokerages after a margin call in futures trading, ultimately ending up on their deathbed, is mostly a direct result of this.
The saying "Stock trading turns you into a shareholder, futures trading leads to suicide" perfectly describes this situation.
"Mr. Su, the global daily trading volume for crude oil futures is at most a trillion dollars, usually only a few hundred billion.
But as you know, oil prices have been plummeting lately, so trading volume has shrunk dramatically."
In China, to trade futures, you have to go through a brokerage firm.
The brokerage firm then obtains the futures contracts from the world's largest futures exchange—the Chicago Mercantile Exchange (CME).
While that place operates 24/7, it's not a money-devouring behemoth like the foreign exchange market, capable of handling trillions of dollars a day.
"So, the market simply can't absorb the 20 billion we've prepared by dumping it all at once?" Su Hao asked.
"It's more than just 'can't absorb'!" His subordinate's voice trembled.
"Mr. Su, if you dump all 20 billion in cash at once, Chicago might just unplug our internet!"
The logic is simple: a sudden, massive buy order of 20 billion is like throwing a depth charge into a calm pond for the continuously plummeting oil market.
The Chicago Mercantile Exchange would unhesitatingly treat this operation as "terrorist activity" that "maliciously disrupts market order."
"It seems the only way is to play the 'ant-moving' game," Su Hao said calmly.
"Buy in batches, taking in a little at a time. This way, we can quietly build up a position of 20 billion."
When futures are mentioned, the first word that pops into the minds of ordinary people is: leverage.
In the A-share market, retail investors can only use a maximum of two times leverage, and institutions at most three times.
But in the futures market, a lawless realm, the rules are much wilder.
Ordinary retail investors start with ten times leverage!
However, for large funds, once it exceeds the 10 billion level, the door to leverage slams shut.
10 billion in funds want to leverage?
No way. You can't find many firms in the world that dare to take on such a deal.
Because a portfolio worth tens of billions far exceeds the capabilities of any risk control model.
Just like the Elliott Management case, if they actually approve it, a sudden wave of default will force you into liquidation, and the brokerage firm that provided your funds will also go bankrupt along with you, ending up hand-in-hand watching shooting stars from the rooftop.
"Mr. Su, we've been trying to keep the purchase price below $40...
But the strange thing is, the more we buy, the more the price drops, like a bottomless pit.
Today's shipment has already fallen to $38."
"Yes, everyone's saying that nobody wants physical oil right now.
Many massive tankers loaded with crude oil can't even find a port to unload.
They're like homeless vagrants, just drifting aimlessly at sea."
"Exactly! Should they sail into a port to store it?
The storage fees would be astronomical, more expensive than the oil itself, practically throwing money away.
It's more profitable to let the tankers continue drifting at sea, burning oil and circling around, than to unload and store it in warehouses."
It's as if the world has been punched in a hole, oil is gushing out everywhere, and prices keep falling relentlessly.
"At this rate, everyone will just be buying and selling futures; nobody will be willing to take physical delivery.
Analysts are predicting that it's only a matter of time before oil prices fall below $20."
"Our research team has also released an analysis report, and the conclusion is very pessimistic:
Unless a world war breaks out immediately, such a massive inventory is impossible to digest, even by a miracle..."
"What about OPEC? How likely are they that they will announce production cuts?"
OPEC, the organization of the oil exporting countries led by Saudi Arabia and composed of a host of oil-producing nations, is essentially the mastermind behind global oil prices.
"The talk of production cuts has been circulating for a while now.
But the general consensus in the market is that even if they do cut production, it'll be a drop in the ocean compared to the current mess.
That small reduction is like taking a piss in the Pacific Ocean—it won't cause any real trouble.
Besides, those member countries are practically fighting amongst themselves right now, glaring at each other, none of them willing to back down.
Who has the mind to sit down and peacefully discuss production cuts? We're just lucky if they don't increase production and start fighting each other!"
Hearing these almost unanimously pessimistic views, even Su Hao, who was very confident in his judgment, couldn't help but feel uneasy.
What if this really goes wrong, and oil prices plummet? Then the 20 billion he invested would truly be gone.
"..."
However, when Su Hao's gaze swept over the analysis report he had been keeping hidden away—the "Extreme Scenario of OPEC Production Cuts"—...
The pages of that report seemed to shimmer with a faint, golden light visible only to him, like a lighthouse in the night.
"Keep buying." Su Hao's voice was calm yet powerful, carrying an undeniable magic,
"Until the entire 20 billion quota is used up, not a single penny left."
***
Meanwhile, another high-stakes gamble was quietly underway at Fang Huan Investment's shipping company.
"Reporting to General Manager Du, we have invested all the company's available funds, totaling six billion yuan.
Currently, approximately 22 million barrels of marine fuel oil are being transported to the ports we have leased through various channels."
"We have leased five large oil storage tanks, three of which are already full, and the rest are en route to the other two."
"..."
Hearing the report, Du Yuanhang, the newly appointed general manager of Fanghuan Shipping, felt a wave of dizziness wash over him, his emotions a tangled mess.
He still couldn't understand what he was doing.