Chapter 16
Chapter 16
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Translator: MadScientist
Chapter: 16
Chapter Title: Plaza Accord (1)
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September 19, 1985.
After getting out of elementary school, I rushed straight to Daeha Securities.
In truth, I wanted to skip school entirely for about a week and keep my schedule wide open, but Grandpa hated that, so it was impossible.
I could skip on the occasional important day, but otherwise, I had to go to school as much as possible.
Click.
Lee Si-hyeon opened the door for me, revealing a plump-faced uncle locked in battle with stacks of documents.
It was Ha Joo-seong, Executive Director of Daeha Securities. He gave a slight smile and bowed his head to me.
"Miss, you've arrived."
"Yeah, I have."
I picked up a scribble-covered sheet of paper and skimmed it. It was a formula for calculating option prices.
"This is a Down-and-in call option, right?"
It was the formula expressing an option that converts to a standard call option once the exchange rate drops to a certain level (the barrier).
Surprise flickered across his face. He'd probably thought I only knew the concept, not the details.
"I knew you were a genius from the start, Miss, but... do you really understand this?"
It was a fair question. Even geniuses couldn't know everything. Especially time—the absolute barrier—was hard to overcome.
But a genius, at least in fields they cared about, was an expert regardless of age.
That's why I answered nonchalantly.
"I read all the materials you sent and studied a bit more. If you adapt the Black-Scholes model for exchange rates and barrier options, you get something like this."
The Black-Scholes model was so famous it was called the F=ma of financial engineering; you could derive it with some differential equations and a normal distribution.
There weren't many adaptations for FX options, but I'd learned it in my past life, so I could even prove it.
It didn't seem that well-known yet.
"Ah, yes. That's right. It's the Garman-Kohlhagen formula. From an '83 paper—how did you even see that?"
Was that when it came out?
My perfect memory didn't cover things I'd never known, so I hadn't realized. No wonder I couldn't find it.
"Well, I'm a genius, after all."
A little surprised inside, I flashed a casual smile and sank into the plush sofa. As I stretched out my short legs, Lee Si-hyeon timed it perfectly and slid a cushion underneath.
"So, did you buy the options?"
I rifled through the papers a bit before giving up and asking directly.
"Yes. We bought about 50 million won from the Wall Street Dreyfus Fund... and a bit from Sony too. Roughly 80 million won total."
"Tch. Should've waited until expiration. A bit disappointing."
Nom.
I smacked my lips in complaint and unwrapped a candy to eat.
"No choice. FX options have all sorts of expiration dates... and with barrier options on top, there really weren't many available."
I understood. That's why I'd only put in 100 million won.
"Hmm, but looking at the ledger, it seems like you bought a lot of other options?"
I tilted my head and sucked on the candy.
Crumple.
I tossed the wrapper casually to Si-hyeon and unwrapped another candy. Chocolate flavor was better than strawberry, after all.
Lately, my tastes had shifted to a kid's palette, so I was living on candy. Good thing this invincible tsundere loli girl had teeth that wouldn't rot.
"Ah... those are options I bought in the company's name. I'm an exec at a securities firm, after all."
From a quick portfolio scan, it looked like he'd taken some safer positions.
"Makes sense. Can't just trade tens of millions with big clients like that. You bundled everything and passed only the ones I wanted to me, right?"
Working with smart people was convenient.
"Yes, exactly. Haha, it's so easy working with someone as sharp as you, Miss."
Oh.
Talent recognizes talent, huh? I almost got touched there.
"Hearing you talk... I figured this position made sense too. Honestly, if I hadn't believed you at all, I wouldn't have bought the options."
That was unexpected.
"Really? Even after I saved you from getting fired?"
"Still, I'm a fund manager and company director now. Can't make decisions that hurt the investor. Rationally, that's right, isn't it? If my judgment's correct, you dodge the risk. If not, it's just my retirement time."
Looks like retirement's not today—
Ha Joo-seong said with a smile on his chubby face.
"Good call. I'll show you it was right."
I returned a small smile of my own.
After that, we had a fun time together. Sounds suspicious, but it wasn't wrong.
Calculating option prices, tweaking volatility and plugging into formulas, chatting about the Plaza Hotel that'd end up in Trump's hands in three years...
Felt good to be in the field again after so long.
Ah, this is life.
In my past life, rotting in my room like a shut-in, I'd thought that was fine...
Guess I really do have gold in my veins instead of blood.
"Alright! That's it for today. No matter what we do here, the options are already bought. Let's meet later. I'll skip school Monday somehow, so we'll talk then."
I clapped to end the day. I grew fast, but I was still a kid who needed sleep.
Ugh, already sleepy.
Too lazy to walk, I had Si-hyeon piggyback me to the car. Then... I must've fallen asleep there.
Woke up at home.
◇◇◇◆◇◇◇ September 20th and 21st, Ha Joo-seong was busy with the three witches' day too, so we couldn't meet. We gathered again at Daeha Securities on Sunday the 22nd.
I passed through the quiet Sunday office and entered Ha Joo-seong's room.
He greeted me warmly and handed over another document. A dollar put option.
"Filled the remaining 20 million won. By the way, Miss, seeing you after two days... you look different somehow, heh heh. Grown taller already?"
Have I?
I stood on tiptoes in front of the mirror and tilted my head. Seemed a bit taller...
Maybe reincarnation perks— I was ahead of my peers in growth and height, but still a kid. I pouted and turned away.
"Eh, whatever. It'll grow on its own."
Lee Si-hyeon, worried about my hard work lately, whispered in my ear.
"Get to bed early to grow tall, Miss. You're staying up all night tomorrow, right?"
"Not that bad. Just till midnight. Because of expiration."
Thanks to that, I'd napped plenty yesterday and slept late today too.
Gathering options from everywhere meant one headache: different expiration standards.
"Mostly matched to London cut... but some New York cut, and Sony's is Tokyo cut."
Options vary by type. New York cut (world standard), London cut (European), Tokyo cut (Asian occasional).
Usually New York cut sufficed, but FX options were mostly European, so London cut this time.
Yen ties meant Tokyo cut too.
For reference, Korean time: Tokyo cut 10 a.m., New York noon, London midnight.
Fortunately, Ha Joo-seong aligned them well, pushing Tokyo cut to the 24th. 10 a.m. expiration was risky.
If it didn't hit 215 yen by then, total loss.
"...What about Wall Street's?"
"London cut. Dreyfus is a major mutual fund. They'd go international standard."
Good. Midnight barrier would be lower, bigger payout if it hits.
22nd. Plaza Accord today.
We couldn't hide our nerves, pacing the office.
"Whew, tense. They said they'd fax local news..."
"How much time left? Ten minutes?"
Lee Si-hyeon picked me up from the screen I was staring at obsessively and set me down back.
"Bad for your eyes, Miss. Juice?"
"Tch."
Unlike two years ago with the Aung San Mausoleum bombing news.
True to Daeha Group's richest exec, his office had a full telex and Reuters monitor.
Don't know? Fine. Finance tools for real-time foreign news—stupidly expensive machines.
Static.
Ah, here it comes.
NEW YORK MANHATTAN PLAZA HOTEL G5 FINANCE MINISTERS, CENTRAL BANK GOVERNORS MEETING... AGREED TO DEPREE CIATE DOLLAR VIA INTEREST RATE ADJUSTMENTS A thrilling shiver ran up my spine. I forced down my rising smile and eyed the exchange rate window.
The blinking screen showed dollar/yen rates.
REUTERS FX TERMINAL USD/JPY : 235.3 USD/JPY : 235.2 USD/JPY : 235.1 USD/JPY : 235.0 Then, overwhelmed by data, the line lagged—the screen blurred briefly before clearing.
Ha Joo-seong, eyes glued nearest the computer, let out a triumphant yell.
"Yes!!!"
USD/JPY : 234.6 The dollar was falling.