Chapter 20
Chapter 20
Translation: Godtl
Options.
What a fascinating financial game they are.
The concept of options existed even in ancient Greece, and during the 17th-century Dutch tulip bubble, there were contracts predicting and trading future price fluctuations.
However, the modern options market truly began in 1973 with the establishment of the Chicago Board Options Exchange in the U.S.
A financial instrument that trades the right to buy or sell an asset at a specific price in the future—that was an option.
And so, people in securities firms call it a lottery ticket.
In Korea, options are standardized and listed as products by the exchange. Institutions sell them, and investors pay premiums to purchase the rights.
This lottery ticket can be sold to someone else before its expiration date.
Its price varies wildly depending on the market.
Just like any lottery ticket.
Most options turn into worthless scraps of paper on their expiration date.
But sometimes—just sometimes—
Judgment Day arrives.
"Manager Kim. Uh, how much has it gone up now?"
"It's at 9... no, now it's 10 times."
"Damn. Then we're about to get a margin call, aren't we?"
"Yes. The Korean exchange already contacted us, saying we should prepare additional margin."
For those who bought options, it didn't matter how the stock price moved.
They could just sell them back or abandon their rights at expiration—no big deal.
So then, who was in trouble?
The original sellers.
The initial sellers of options had to deposit margin with the Korean exchange to sell options in the first place.
The rule was to deposit at least 5x to 15x the margin.
The problem arose when the price of the sold options exceeded the margin, triggering a margin call.
And the moment they failed to meet that margin call—
Forced liquidation would strike.
"Forced liquidation is absolutely out of the question!"
Whether the original seller was a fund, an institution, or even a securities firm—
The moment they faced forced liquidation, trading would be temporarily halted, and their positions would be liquidated at the current skyrocketing market price, resulting in catastrophic losses.
"First, recall everything we've spread out! And roll over any positions with upcoming expiration dates!"
"Will we have enough funds to cover the margin call, Chief?"
"I've already talked to the higher-ups. Told them to put out the immediate fire first. Right now, dealing with the margin call is the priority. Upstairs is in a frenzy, telling us to sweep everything up before prices rise any further."
When Chinese securities first crashed, only the overseas markets were in chaos—the domestic market had remained relatively calm.
But then the tsunami hit in an instant, flooding everything in its path.
They had to frantically bail out the water pouring into their homes, but there was one problem.
"How the hell are there so many buy orders but no sellers?! Just how many times more are they planning to squeeze out of this?!"
It was already 10 times.
And yet, someone was hoarding all the swept-up supply, refusing to release it.
The longer this went on, the higher the price climbed.
At this rate, it wasn't just 10 times—20 times seemed possible.
"Bastards. Just who the hell is bleeding us dry like this?"
＊＊＊
Everyone knows this much:
Bubbles always burst eventually.
That's why they say—
Catching the perfect timing to sell is pure luck.
In other words, those who get out before the bubble bursts are the winners.
"Last month was bad enough, but this month's performance is looking bleak too. There's just no end to it."
"Still, we defended well. The shockwaves from the Chinese market hit Korea a bit later than expected. And our thorough risk management played a big part."
"What's the point of good risk management when we're still in the red? Do you know how many reports I've had to file just today?"
"Well... compared to the wails coming from other securities firms, we're still lucky."
For every bull market, there must be a bear market.
But the problem was when the swings became too extreme.
"At least this isn't Lehman Brothers-level bad. That's something to be thankful for."
"Whew. Compared to the subprime crisis, this is practically heaven."
Whenever CEO Hwang Dae-un recalled the 2008 subprime mortgage crisis, he still felt dizzy just thinking about it.
"Back then, options skyrocketed 100-fold, forcing quite a few places to shut down. We had margin calls blowing up left and right and had to borrow money using bonds as collateral."
That's why, ever since then, Gwangun Securities had built systems to minimize risk in options trading as much as possible.
Even if it meant lower profits, at least the damage would be minimal if another situation like that unfolded.
"But this situation must be devastating for those who got caught holding the lottery tickets."
"Absolutely. Especially some funds and securities firms—they're in complete chaos."
"Why? Because prices went up?"
"Well, prices have obviously skyrocketed, but the real problem is that the people who swept up all the volume aren't dumping it. Occasionally, tiny amounts come onto the market, but the big holders aren't showing themselves. Everyone in Yeouido is scouring the market with fire in their eyes, trying to figure out who's holding it."
"Huh. At this point, doesn't that mean they had insider info? They swept it all up beforehand and aren't even selling now? That's ruthless."
"Exactly. The sellers must be bleeding dry. The price just keeps climbing endlessly."
But something had been bothering him for a while.
Executive Director Tak Jae-ho, who was delivering the report, kept smirking the whole time.
Even though the company was taking such heavy losses because of the Chinese stock market!
"Why the hell are you grinning like that?"
"Chairman. You haven't asked who's holding those options yet."
"How the hell would we know that? Exposing your position is way too dangerous."
What positions I hold—
That's something you never let the other side figure out.
Because if they do, the chances of getting played skyrocket.
That's why everyone kept their positions strictly confidential.
"Do you know how our new team leader is doing? You haven't gotten his report yet, have you?"
There was only one "new team leader"—Jeong Jin-ho.
"Actually, I was just worried about how our Jin-ho was holding up. Well? Is it bad over there too?"
Right after becoming team leader, this disaster hits—he must've taken massive losses.
It was that kind of market, after all.
Maybe once things settle down a bit, I should give him some words of encouragement.
It was an unavoidable natural disaster, after all. No point in getting too discouraged.
"Wait."
But something felt off.
"Why are you suddenly bringing up Jin-ho?"
Executive Director Tak's lips curled into a smirk.
"That volume—it's all in Team Leader Jeong Jin-ho's hands right now."
"That volume—you don't mean...!"
"Yes. The very same volume everyone in Yeouido is desperately searching for."
"!?"
＊＊＊
Not today either.
I stared at no fewer than nine monitors, my mouse darting back and forth between buttons.
From the options we bought to the ETFs—
Everything was in the green.
And the biggest profit-maker was, unsurprisingly, this option.
Honestly, I wanted to cash out right now and lock in the gains.
But my gut still wasn't giving me the signal.
So, ever since the bubble burst, I'd just been sitting blankly in the office, flicking my mouse around.
Knock knock—
"Ah, yes."
Just then, Assistant Manager Lee Hye-rin walked in.
...holding a plate of cookies in one hand.
"Team Leader. Have a snack while you work."
Had she noticed me flinching?
Assistant Manager Lee set the plate down in front of me and rested her hands on her hips.
"Relax, I didn't make them. No need to look so terrified."
"Haha. W-when was I? I love your cookies, Assistant Manager."
"Team Leader, you really can't lie to save your life. It's written all over your face!"
"..."
"Just you wait. I'll practice so much, I'll make the most delicious cookies in the world!"
"I'll be cheering you on!"
Then, in a casual tone, Assistant Manager Lee asked,
"By the way, Team Leader. We're still holding, right?"
The team must be getting bored too.
For most proprietary traders, the battlefield lies in executing hundreds of day trades daily, fighting amidst that intoxicating thrill and breathless tension.
Weren't the other teams already scrambling to recoup their losses through frantic day trading?
Yet here we were, doing absolutely nothing, just letting time slip by.
"As I mentioned before, trading is entirely up to you. If you believe now is the right time to sell, go ahead and sell immediately. You've already secured enough profits."
"But... I also think holding for now might be better. The Chinese government hasn't announced any groundbreaking measures yet. And thanks to that, we're still making money."
That was likely why my instincts weren't sounding any alarms.
Because nothing substantial enough to stabilize this market had emerged yet.
"I'll let you know when I sense the right timing to sell."
"Wow! Then we'll just wait for your signal, Team Leader!"
Deputy Manager Lee Hye-rin bowed slightly before stepping out.
Once I confirmed she had left, I popped one of the cookies from the plate into my mouth.
Ah. Delicious.
I felt a little guilty toward the deputy manager, but it had been a while since I'd tasted such good cookies.
Just as I was shaking off the encroaching drowsiness with cookies and coffee, hovering my mouse over the sell button—
"...!"
A sudden signal shot up from my fingertips, striking my mind like lightning.
＊＊＊
"What did the Team Leader say?"
"Huh? Oh. It seems he's still holding too."
"Well, selling now would be a waste anyway."
You'd think doing nothing would be unbearably boring, but Team 7's members didn't feel that way.
Despite the office being warm, their hands were trembling uncontrollably.
Right now, Team 7 was recording the highest profits since becoming proprietary traders. The problem was, to realize those profits, they had to sell their holdings.
So they were barely restraining themselves from dumping everything immediately.
"When does the Team Leader think the right selling window will be?"
"How should I know? How could a sparrow understand a phoenix's thoughts? We just follow orders."
Section Chief Seo slurped his coffee as he spoke.
"..."
The team members stared at him curiously.
When Section Chief Seo first joined the team, he had seemed full of complaints.
But now, he practically worshipped the Team Leader.
"They say catching the right time to sell is even harder than timing a buy. The Team Leader must be being cautious."
"If nothing major happens, holding a little longer seems fine. Looking at the current indicators, waiting for a better selling opportunity would be the smarter move."
But just because the indicators looked good now didn't mean they were the ultimate answer.
Just look at this bubble crisis.
Everyone had been drawing hope from all sorts of indicators, convinced it would rise to 300%, only for regulations to suddenly burst the bubble.
"So let's wait. Even to us, this doesn't seem like the right time to sell yet."
"All well and good, but I've got nothing to do. Spending the whole day just staring at my phone and reading books—what kind of company life is this?"
"It's just temporary. If the Team Leader gives the order, then we'll—"
Bang—!
Just as the team members were murmuring among themselves—
The closed door to the Team Leader's office swung wide open.
Everyone jolted, turning their heads.
There stood Team Leader Jeong Jin-ho, his gaze entirely different from before.
"Team Leader...?"
"Everyone—now."
"Huh?"
"Dump all the holdings. Every last one."
"!?"
Finally, the order—no, the divine decree they had been waiting for had arrived.
But there's always one or two foolish humans who dare question such things.
"Team Leader. R-right now? The prices are still rising—"
"Yes. If we hold just a little longer, they might go even higher—"
"Everyone, silence!"
But Section Chief Seo swiftly shut down those doubters.
"Who do you think you are, acting so presumptuous? Move exactly as the Team Leader instructs. Understood?!"
That snapped them back to their senses.
Wasn't a single word from Jeong Jin-ho more reliable than a hundred data points?
"Ah—!"
"R-right away, Team Leader!"
The once-leisurely office erupted into frenzied activity.