Chapter 658: Maximizing Benefits

Theoretically speaking, when you buy a short option, the maximum loss is the premium of the option. However, when you sell a long option, there is no upper limit to the theoretical loss.

Of course, if you hold the underlying shares of a stock and make a sell call at the same time, this is a sell cover call. No matter how high the stock price rises, you will have stocks to deal with the selling action that occurs when the option is exercised.

The stock income has just decreased.

Risks are often accompanied by benefits. The greater the risk, the greater the benefit, and the greater the benefit, the greater the risk. It is not easy to draw conclusions on how to choose.

Hu Yang and Yu Hongbo discussed it in the office for almost two hours before settling on a rough plan.

In two days, Yu Hongbo will take a team to Xiangjiang and hire a few suitable brokers to complete all transactions together.

As for the accounts, they are all ready-made. Huijia International Investment has already opened securities and futures accounts in North America, and you can start operations as long as the funds are in place.

During this period, Amazon's stock price has been fluctuating around $70. Hu Yang holds 62.4 million shares of Amazon common stock, and an additional 40 million shares converted through convertible bonds, which have also been allowed to be listed for trading.

It is actually not cost-effective to sell these stocks now. Even if it can be judged that there will be a decline in the next few months, it is still a question whether they can be bought back in full.

Therefore, Hu Yang and Yu Hongbo discussed that this operation would use a combination of tools to maximize profits while ensuring that the shares held remain unchanged.

In the afternoon, Hu Yang called Xia Bing and asked her to mobilize some funds to go to Xiangjiang.

"Mr. Hu, the RMB has begun to appreciate against the US dollar. The exchange rate has just exceeded 8 a few days ago and reached 7.92. Our analysis shows that there is still room for appreciation in the next few months, so it is better to make US dollar loans in Xiangjiang."

Because in Huijia International's accounts, except for some Hong Kong dollars held in Hong Kong, the rest of the funds are in the mainland, and they are all RMB deposits.

A few months later, if the exchange rate rises again, there will be an interest rate loss when converting into RMB. Of course, loans also have interest, and Xia Bing's judgment is that even if interest is required, it is more cost-effective than the exchange difference.

"That's okay. You can find a way to raise no more than 5 billion US dollars in funds. I will need it soon. Lao Yu will be going to Xiangjiang in the next two days. You have to ensure that there is enough margin in our US stock account."

Hu Yang discussed his ideas with Xia Bing and asked Xia Bing to supervise this operation.

"No problem, I will leave for Xiangjiang later. Within two days, I will definitely be able to raise the necessary funds."

Huijia International Investment has not made such a big move for a long time, and Xia Bing seemed very excited. Now that Hu Yang has set the direction and Yu Hongbo is responsible for the operation, she must take on the responsibility of supervision and risk control.

After get off work, Hu Yang returned home.

Eating, walking, playing with his son... After the little guy went to bed, he called Tian Sichun to his study room.

"Chunchun, I may have to go to Xiangjiang frequently in the next few days, and I may not be able to come back every day. I originally wanted to spend more time with you and the child, but I have nothing to worry about."

Hu Yang felt a little embarrassed because he had to run out again as soon as he came back. Moreover, his parents and sister had to visit Xiao Yifei on weekends, so he probably didn't have much time to spend with them either.

"I'm used to your busyness. Ah Yang, if you have time, spend more time with your children. If you're busy with work, just be busy with your work. We understand."

When Tian Sichun married Hu Yang, she was already mentally prepared. Of course she had to support her man when he was busy with his career outside.

"Yeah, thank you for your understanding."

Hu Yang didn't know what to say for a moment. Tian Sichun never caused trouble because he was busy, and he rarely worried about family matters. His life was still very warm.

"Hey, are you so polite? It's getting late, go take a shower quickly."

Tian Sichun smiled, rolled his eyes at Populus euphratica, and went back to the bedroom alone.

Hu Yang didn't waste much time. After making two phone calls, he quickly left the study.

Two days later.

Hu Yang took Wu Xinhui and others to Xiangjiang.

Yu Hongbo and his team have arrived here in advance and are busy doing some preliminary preparations.

"Boss, the funds you need are already in place, and all 5 billion US dollars are in the margin account."

After Hu Yang passed the customs by car, he went directly to the office of Huijia International Investment in Xiangjiang.

Xia Bing was waiting for him and reported to him the financing situation as soon as they met.

"Very good! Mr. Xia, Lao Yu and the others have already started working. Your supervision and risk control should keep up. As for me, I just look around when I have time. Normally I don't interfere in specific affairs."

Hu Yang set the tone. He was still responsible for the overall situation and left all specific matters to Xia Bing, Yu Hongbo and others.

The hardest worker is definitely Yu Hongbo. The opening hours in North America are all late at night, and he often has to be busy until after four in the morning.

Xia Bing's work here is relatively easy. Her men are watching at night, so she doesn't have to go into battle herself.

"Amazon's stock price has risen sharply in the past two days, and it has now exceeded 80 US dollars."

Hu Yang still lives in a hotel in Xiangjiang, and during working hours he stays in the office of Huijia International Investment in Central.

With the assistance of Wu Xinhui and Mi Qi, daily work will not be affected.

He usually has lunch with Xia Bing and Yu Hongbo at noon, and listens to Yu Hongbo's work report.

"It seems that most investors in the market are not aware of the coming crisis. Lao Yu, as we have agreed, buy Amazon's put warrants at around $90."

Because Yu Hongbo does not intend to sell all of Amazon's shares at high prices, it is a relatively good choice to sell part of the shares and then buy part of the put options.

This is equivalent to adding leverage, which can continue to amplify profits.

At this time, the U.S. stock index continued to rise, but there was also obvious weakness. When the Dow Jones Industrial Average reached 13,000 points, Yu Hongbo was ready to buy and bearish on the 3X-ETF.

That is, shorting the ETF index fund with triple leverage. Hu Yang and Yu Hongbo chose to short the Dow Jones Industrial Average. When the index falls by 1%, the ETF index rises by 3%.

"Boss, I bought 40 million put options on Amazon three months from now at a price of US$5 each, with an exercise price of US$75."

Yu Hongbo watched the target enter the expected space, and he operated it almost every day.

The first thing to be completed was the purchase of put options. Recently, he bought a total of 40 million Amazon put options with an exercise price of $75.

For U.S. stock options, each contract (one lot) is 100 shares. In other words, if Yu Hongbo really wants to exercise his options upon expiration, the corresponding number will be 4 billion shares of Amazon stock.

As for whether there are so many stocks, don't worry. Options are inherently financial derivatives and are in the nature of gambling.

"It's so easy to buy a large number of put options. It seems that the market is still very optimistic about the future of the stock market."

The put options bought by Yu Hongbo cost a total of US$200 million, not counting handling fees. For those who are optimistic about the market (and those who sell put options), these US$200 million is a waste of money.

.

Hu Yang said nothing more and let Yu Hongbo continue to stare at the market.

In the past two days, Hu Yang did not go back to the hotel to sleep at night. He set up a folding bed in the office at night, and often went to bed in the middle of the night.

That night, U.S. stocks continued to rise after the opening. Amazon was no exception, with its stock price exceeding $95 and fluctuating around $96.

"Boss, the price of the put option we bought has dropped again. It is now $3."

When Yu Hongbo bought the put option, Amazon's stock price was less than 90 US dollars. Now that it has risen a lot, the price of the put option will naturally fall accordingly.

In other words, after buying a put option, if the target stock immediately falls, the price of the put option will also rise.

"Then buy some more."

Hu Yang thought for a while and decided to buy some more. After all, it was cheaper, right?

"Boss, there aren't too many on the market. I can probably buy another 10 million pieces. Do you want to buy them?"

Yu Hongbo also knows that now is the time to pick up bargains, but holders of such options are still hesitant, and the trading volume is not large for the time being.

"Flies and mosquitoes are all meat, buy them!"

With a wave of Hu Yang's hand, Yu Hongbo bought another 10 million Amazon put options. These were the same as last time, and the exercise price three months later was US$75 per share.

Not counting handling fees, another US$30 million was invested.

At this time, it was already late at night. Watching the US market in Asia is so difficult. Due to the time difference, day and night are often reversed.

Wu Xinhui and some staff made coffee for everyone and brought it over to prevent everyone from getting sleepy.

"Huh? The Dow Jones has hit 14,000 points!"

After buying the put option, Yu Hongbo had nothing to do for the time being and sat down to chat with Hu Yang. The rest of his team were still looking at the market conscientiously when someone suddenly exclaimed.

Yu Hongbo quickly stood up and ran over to see that the market had hit a new high.

"Lao Yu, don't be stunned! Hurry up and buy short ETFs."

Hu Yang is short on the Dow Jones Industrial Average ETF. Buying at this point is a good choice.

Yu Hongbo did not hesitate and immediately directed his men to operate.

This time, I bought 3 billion U.S. dollars of short-selling ETFs in one fell swoop, and the corresponding target was the Dow Jones Industrial Average.

After the transaction is completed, there is less than 2 billion U.S. dollars left in the margin account. The remaining funds cannot be moved anymore. If the margin needs to be increased, the position will not be liquidated due to fluctuations.

"Lao Yu, I'll leave the rest to you. I'll return to the deep sea tomorrow, and you can stay in Xiangjiang."

The exercise date of the put option is three months, and the ETF you buy can be held for a long time. You can sell it when you feel the time has come.

"Boss, in fact, we can sell the Amazon stock in our hands first. If that doesn't work, we might as well sell half of it. This operation will maximize our profits."

Yu Hongbo hesitated for a moment and then put forward his own suggestion.

He knew what Hu Yang was worried about. He was afraid that after selling the stocks in his hands, he might not be able to buy them back at a low price.

In fact, you can also use call options to lock in the shares you want to buy at low prices.

Hu Yang thought for a while and shook his head. Don't try to do anything perfectly. It's actually good to leave a little regret.

Yu Hongbo sighed and stopped talking.
To be continued...