With the influx of vulture (hedge) funds, coupled with the fanning of market makers, the short selling of Volkswagen Group's shares has expanded by an order of magnitude in a matter of days, more than doubling from the previous 4.5% to a staggering 10%, which means that more than 8 billion euros of funds have been invested in shorting Volkswagen Group. And because of the weight of the Volkswagen Group in the German index, plus the funds from short indexes, options, OTC CDS, and other highly correlated stocks, this figure has reached a staggering 10 billion euros.

Although these shares did not hit the market at the same time, such a large sale did not affect the performance of the Volkswagen Group's share price too much, and the Volkswagen Group's stock performance immediately stood near 180 euros after a slight decline. Hedge funds are not surprised by this phenomenon, they mistakenly believe that this is the "vests" of the Porsche Group secretly raising chips, and they naturally stop holding back and go all out to sell the shares of the Volkswagen Group in the market.

"Volkswagen Group's stock price fluctuates abnormally, and there are frequent sell orders of millions or even tens of millions of euros in the past few days, and it seems that they are indeed going all out to short!"

On Friday, October 21, in a temporarily rented office in Frankfurt, Jiang Shan reported to Zhong Shi with a happy face.

"The whole of Europe is shorting the shares of the Volkswagen Group, and there must be a lot of hedge funds coming this time." Zhong Shi put his hand on his cheek, looked at the market seriously, and estimated the value of the transaction, "From 240 euros to 180 euros, the decline has reached 25%, which should be enough for many hedge funds to make a lot of profits." It's a pity, it's a pity......"

"What a pity?"

The smile on Jiang Shan's face suddenly froze, and he immediately reacted, "Zhong Sheng." You say they're too greedy? ”

"Yes, it's too greedy!" Zhong Shi pointed to the K-line chart on the computer screen and patiently analyzed, "When 240 euros fell to 200 euros, because of the psychological barrier, some funds began to buy. While it's not clear whether to close or be bullish, a rally is inevitable. If a hedge fund is trading in the short term, from the range of 200 euros to 210 euros, they close a part of their positions through operations, steadily pocket their profits, and then continue to sell at a high level, taking advantage of the big short to suppress the stock price again. In this way, on the one hand, it avoids the risk of volatility, and on the other hand, it retains a certain amount of liquidity between repeated operations, so that it is easy to close positions when unexpected situations occur. Of course. For large hedge funds, this approach is not suitable, and their expected price is too low, and this benefit should not be seen. ”

"After all, they didn't think about the possibility of forcing too much short!" Jiang Shan echoed with a smile.

The so-called long short forcing refers to a strategy in which traders force short positions to default or deliver at a high price by controlling long positions on futures or monopolizing the number of deliverables through financial advantages.

Because the scale of the futures market is much larger than that of the spot market, there are strategies such as long forcing short or short forcing long in the two markets. Here's an example. A cotton producer is hoarding a large amount of spot cotton to go long on a month's contract. and shorts form a trading order that far exceeds the spot scale. When the delivery date is approaching, as long as the cotton merchant releases the rumor, he will not deliver in cash, and the bears will have to go to the market to collect cotton everywhere, or be forced to raise the futures price of cotton and admit defeat. And at times like these. The losses for the bears will be extremely heavy, because they have no choice but to be blown up in minutes.

In the same way, if the above-mentioned role becomes a cotton trader, he can choose to profit by shorting and forcing long. Because there is a lot of cotton stock hoarded on hand. So go short unscrupulously, and they have enough spot delivery anyway by the time of final delivery. And for the bulls who are opponents, this scene is undoubtedly disastrous, because they are either forced to take the spot or throw in the towel at a very low price.

Although these are extreme cases, they happen from time to time in both the futures market and the stock market. And every time there is a long or short or short force, it is an extremely rare big scene, and the entire market will participate in it. It's the equivalent of a gamble, and as long as you can bet in the right direction, you will make far more money than usual.

Now that Jiang Shan and Zhong Shi are saying this, they naturally break the plan planned by the two and the Porsche family, that is, to force more short! The Porsche family's 42.6 percent stake in the public float and the option transferred by Bell Stone leaves little leverage in the market, as the Lower Saxony government still holds a 20.1 percent stake. So when the Porsche family announced that it would hold this part of the options, it was the end of the bears.

"Zhong Sheng, when do you think the Porsche family will start?"

For the Porsche family's secret actions, Jiang Shan is simply a caveat, because all this is almost his operation, although now everything is handed over to the Porsche family, but he is still observing the follow-up of the matter.

"If it were you, when would you launch it?" A strange look suddenly appeared on Zhong Shi's face, and after glancing at Jiang Shan meaningfully, he asked instead of answering, "This is really an interesting question." It can reflect the style of operation, if it is you to force the short, when do you think the most appropriate time? ”

"The day before the delivery date, or the day of the day, of course!"

Jiang Shan replied without hesitation, with a decisive expression on his face, "The day before the delivery date, there is still a processing time for the short one. At this time, the two parties can discuss whether it will be cash delivery or final physical delivery. And if it is the day, basically the bears have no choice, and the speculative bears can only buy long orders at a high price to close the position, and the consequence of this is a crazy rise in prices, which may be even more terrifying than the previous one. Although each has its own advantages and disadvantages, they can also achieve the effect of maximizing benefits. ”

"Radical!" Zhong Shi had a knowing expression on his face, "As a hedge fund practitioner, the aggressiveness of the investment style is an inevitability, because we have to consider the α (alpha value). But you ignore another condition, that is, in the futures and options market, when the delivery date is approaching. The volume is no longer as large as it used to be. Because both the long and short sides know that there is a possibility of persecution in the market, except for the futures market with a single cash delivery, other markets are the same. At this time, they have already transferred part of their positions to the next month or other far months. So in this case, what you call maximizing benefits may not be achieved. ”

"I see, I really didn't think about it!" The country suddenly realized. Then he frowned and asked, "Then when is the best time to start?" Timing is very important, but if it takes long enough, it doesn't seem good to leave too much time for the other person to prepare. ”

"That's true!" Zhong Shi nodded slightly, agreeing with Jiang Shan's ability to draw inferences, "Let's talk about the timing of the Porsche family's choice, I personally think that this Thursday, that is, yesterday, should be the best." This allows the bears a certain amount of time to close their positions. It also put great pressure on the Volkswagen Group. Of course, that's just what I think. The fact that they did not launch yesterday shows that they are extremely determined to buy the Volkswagen Group, and for the bears, they are undoubtedly driven into a dead end. The Porsche family does not seem to intend to follow the principle of being a man and leaving a line for a good time in the future. This deal is something to see. ”

Next Wednesday. That is, October 23 is the delivery date of futures and options in the Frankfurt market. Prior to this, institutions or individuals holding certain futures or options were required to declare whether they would exercise or not before the end of trading on Monday. However, before that, there will be institutions or individuals who announce the exercise of rights, because institutions or individuals who really want to do hedging will definitely leave a certain amount of time for the other party to prepare.

In other words, the purpose of the institution or individual who announced the exercise of power on that day is definitely not pure.

After listening to Zhong Shi's words, Jiang Shan fell into a long silence.

……

"I always felt that something was wrong!"

Central Park, New York. Soros was in a depressed state of mind after watching the market late at night, and he was lying on the sofa chair and weakly facing Rodney. "I've had a sense of foreboding these days," Jones said. This feeling has been away from me for a long time! ”

"What does it feel?"

Rodney. Jones was equally exhausted. He reluctantly sat up straight, and after listening to Soros's words, his brows furrowed involuntarily, "George, are you overworked lately, do you need me to call a doctor?" ”

"No, no, I'm not overworked!" Soros waved his hand and said, "It's just a wonderful feeling, but I can't put it into words." If I had to explain, I would only say that we seem to be in danger lately, and very much. ”

"Danger? What dangers? It should be an investment risk! "Rodney. Jones's reaction was quick, and after a little thought, he understood what Soros wanted to say, "But the market hasn't been too volatile recently, and after the success of the bailout policy, the Dow Jones index barely stopped its downward momentum." If anything else, I'm afraid it's our short sale in the Frankfurt market, but what I can't understand is that there is no danger in this transaction at all. ”

"No, no, my senses are very accurate!" Soros shook his head, "This feeling has occurred at important times such as the stock market crash in 1987 and the yen in 1998. As you know, we lost a lot in those incidents. I still don't feel right, but I still have to look at the performance of Volkswagen Group's stock. ”

As he spoke, he turned over, opened the Bloomberg terminal, and carefully checked the shares of the Volkswagen Group, and this time he did not even let go of the options of the Volkswagen Group.

"Hey, why are they announcing such a small number of options?"

Soros pointed to the 17.5% total buy position data and asked, "It stands to reason that Volkswagen Group's stock price has risen so wildly, and their options trading volume and position level are never so low, how can it be only 17.5%, which seems unreasonable, don't Germans play options?" ”

"I know this!" Rodney. Jones said nonchalantly, "The Frankfurt market has a rule that if you don't buy options with leverage, but all your money, their positions can be kept private. Once the funding requirements of brokers and exchanges are met, these positions do not need to be made public. Both bulls and bears are the same, it must be said that this rule of the Germans is not quite the same as ours. ”

"I see," Soros nodded, not paying much attention to it, and then went to flip through the next derivative. But just then, a thought sparked in his mind. Then he looked at Rodney. Jones, who found the other party equally horrified.

"They bought long options, a lot of long options!"

The two said in unison.

"Yes, yes, that's it!" Soros immediately understood, "The 10 billion euros are used for option exercise, as long as the time is right, they will announce to the outside world, and then the liquidity of the entire market will be reduced a lot, and the stock price of the Volkswagen Group will jump to sky-high prices!" ”

"The most recent delivery day is next Wednesday!" Rodney. Jones's face was bloodless. (To be continued......)

PS: Thank you to kalm gods, radish ~~ cabbage, seanju1, brick Afei, Pumik, Xingzhi 0 and other book friends for voting for the monthly ticket! At the beginning of the wonderful content, the author continues to work hard, looking forward to the support of more book friends, I hope that the results of this book will be on a higher level, and the author and everyone will work together!