"What do you mean?" Lu Feiqi said.

"OTC options, have you heard of them?" Zhong Shi was a little surprised, didn't this agent know that there was such a thing?

Over-the-counter (OTC) options, broadly speaking, are options bought and sold outside of an exchange, and compared with on-exchange options, the underlying amount is larger, the number of transactions is larger, and they are not subject to regulatory supervision, so they are very actively traded.

However, OTC options have a problem, which is credit problems, because of the lack of mandatory delivery, the two parties to the transaction are likely to default when the delivery period approaches. However, this problem is not difficult to solve, that is, to add a third party with a good credit rating as a guarantee between the two parties to the transaction.

Such third parties are often acted by large commercial banks, and in return for the guarantee, the commercial bank often requires a guarantee fee or a percentage of the profits of both parties to the transaction.

"Yes, yes!" Lu Fei hurriedly agreed. "I don't know which aspect and direction Mr. Zhong wants to do options, so let's find a counterparty as soon as possible."

"The opponent of the Swiss franc, short selling, the transaction amount is about three billion dollars, and the term is about two months, is there a problem?" Zhong Shi thought about it, and then reported such a number. His current net worth is about $2.3 billion, and with a little leverage, there is no problem in raising $3 billion.

"No problem, I'll help you get it done as soon as possible." Lu Fei responded in one bite.

Zhong Shi knew that the currency crisis in Europe was far from stopping, and that international funds would continue to attack other currencies in the European exchange rate system, and that international hedge funds would continue to attack the French franc in later history, even until ninety-three years.

Basically, with the exception of the Deutsche mark, which accounts for one-third of the European exchange rate system, several other currencies have been attacked to varying degrees.

The reason why the currency crisis caused by the European exchange rate system in later generations was simply regarded as the crisis of the pound was because Britain was an old capitalist country, and the pound was also an important part of the European exchange rate system, and the Bank of England was the first central bank to be defeated by international funds, which was "famous".

Before that, no country's central bank had ever been defeated by international money.

An even more important reason is that hedge funds have finally made a name for themselves in the international financial markets through this attack, and the market has rediscovered the power of these institutions.

When the pound was attacked, the Swiss franc was also attacked, but the Swiss government urgently raised short-term interest rates, so that the volatility of the foreign exchange market temporarily stopped, which is of course due to the Swiss government, but more is that the main battlefield of these capitals is on the British pound, lira and other currencies, and when they free their hands, the Swiss franc will be wiped out.

After hanging up Zhong Shi's phone, Lu Fei ignored the jet lag, immediately picked up the phone again, and made an appointment with a group of professionals to discuss the Swiss franc and US dollar option schemes.

"Short selling the Swiss franc? This customer's vision seems to be a bit of a problem! ”

After the exit of the British pound from the European exchange rate system, other currencies have strengthened to some extent, and it seems that the currency crisis in Europe has passed in the short term.

"Having a problem with your vision? He has made a bet of three billion dollars, and a percentage point of rise and fall is a fluctuation of 30 million dollars, an astronomical amount! ”

"That's just as well! So why does he think that the Swiss franc will fall when it expires? ”

"This client must have a trick up his sleeve, maybe he's one of those who attacked the pound, could it be that their next target is the Swiss franc?"

"Quite possibly! With the fall of the pound during this period, it is estimated that he would have earned 100 million pounds by now if he was cross-positioned. ”

"So what kind of option agreement do we offer him?"

"Our side is mainly for the purchase and sale of yen/dollar agreements, and there are really not many Swiss francs, so I guess we have to ask the British side. With such a large amount of options, it is estimated that it is difficult to find a counterparty, right? ”

"Not necessarily, you haven't seen the Swiss franc rise against the dollar in the past few trading days, and the Swiss government's intervention has begun to bear fruit. I think it will rise in the next few days, and it should not be difficult to find the corresponding counterparty in the market in this case. ”

"You guys wait first, it's trading time in Europe, I'll call and ask first."

……

A few minutes later, the voice sounded again.

"It just so happens that there are two Swiss franc options contracts on the European side looking for counterparties, one is a long option with a one-month strike price of 0.8000, the target is $1 billion, and the other is a two-month strike price of 0.8200 long option, the target is $2 billion, which seems to be a hedging transaction by an importer."

"How can there be so many bullish options, is it that the Swiss government is ready to intervene in the foreign exchange market recently?"

"It's not good to say, the central banks on the European side are now like frightened birds, and they will intervene at the slightest hint of trouble, and what happened to the Bank of England scares them!"

"Then let's design the contract, show it to the customer first, and then find a counterparty in the market. After all, there are so many local banks in Switzerland that they don't worry about counterparties at all, and they all want to make some profits at this time, what do you think? ”

"That's fine. Now there are more bulls, and if you want to bet against the bearish side, it should not be difficult to find a counterparty. By the way, what exactly are the specific requirements of your customers? ”

"I didn't say much specifics, but I'll show him when I design it. We can make the price of the franc a little lower, so that it is easier to find a counterparty. ”

"That's it!"

……

The private bank acted quickly and quickly designed a contract with a selling price of $0.7000 for two months. The specific content of this contract is that after two months, Bell Stone will sell three billion Swiss francs to the counterparty at a price of 0.7000 Swiss francs to one dollar.

However, Jihua did not change quickly, and in the process of contract formulation, the Swiss franc rose sharply for two trading days, and the Swiss franc against the US dollar in the market has risen to 0.8000 Swiss francs per dollar, which made Lu Fei and her team reformulate the contract again and set the execution price at 0.7900.

This means that on the delivery date, as long as the Swiss franc is above 0.7900, the bell stone will incur a loss. Below 0.7900, Bell Stone will be profitable.

After Zhong Shi nodded, HSBC used its global network to start looking for a counterparty in the market, and soon the contract was closed, and the counterparty was a Swiss commercial bank, who was looking for a contract in the market to hedge its Swiss franc assets for hedging needs.

It was already two days later when the contract was passed to Bell Shi in Europe along with the contract of the offshore company, and after a slight modification of the contract, Bell Stone signed the contract in the name of Skyline Holdings.

The original contract was as follows: Bell Stone had the option to sell 3.75 billion Swiss francs on 20 November 1992 at an exchange rate of 0.7900 Swiss francs to 1 US dollar, after paying a premium of US$30 million. HSBC will guarantee the entire transaction with a commission and a guarantee fee of 20% of the profits.

Zhong Shi revised the commission guarantee fee, and he roughly calculated that 20% of the profit was too high, and Zuihou agreed with the private bank to guarantee it at a cost of 50 million US dollars, thus removing the 20% part of the profit.

With a stroke of his pen, Zuihou signed the OTC option VAM contract to short the Swiss franc because his funds were in HSBC, and the agreement automatically took effect after the transfer of $30 million to the corresponding account.

In addition to shorting the Swiss franc, Bell Stone soon made the same contract on the Swedish krona, about the same price as the previous one, so that the more than $300 million that Bell Stone earned on the pound was quickly used in half.

After completing these agreements, Bell Stone and Andrew moved on to the next round of investment.

This time they put all their money into the British government bond market and the stock market, according to Zhong Shi's analysis, the British domestic economic policy will face a major adjustment, the British government does not need to maintain such a high level of interest rates to make the pound and the European monetary system peg, so the adjustment of interest rates will be imperative, the bond market and the stock market will benefit.

After all this, Zhong Shi and Andrew finally returned to Hong Kong.