svetikya Chapter 20 I want to use double leverage
Chapter 20 I want to use double leverage
"Dad, this is Professor Han Zhenhua, a British national. He's a new lecturer at our school and is very talented in physics," Lin Xiaowen eagerly introduced, emphasizing "professor" and "British nationality."
"Oh?" Lin Yaodong's face showed surprise.
A lecturer at St. John's University? So young? And a British citizen? These pieces of information combined forced him to reassess the young man before him.
He stood up and extended his hand: "Teacher Han, you are a promising young man. It's a pleasure to meet you. I am Lin Yaodong."
"Chairman Lin, I have long admired your name. I apologize for disturbing you." Han Zhenhua shook hands with him in a humble yet respectful manner.
After sitting down and exchanging a few pleasantries, Lin Yaodong asked, "Teacher Han, you've come here today not just to have my daughter introduce you to this old man, have you?" His words carried a hint of teasing, but his eyes remained shrewd.
Han Zhenhua knew that beating around the bush with such a big shot was pointless, so he said directly, "Chairman Lin has a keen eye. I do have some interest in the financial market and have recently done some research, discovering some opportunities. I would like to use your exchange's platform to conduct a transaction."
"Oh? What kind of operation?" Lin Yaodong leaned forward slightly, showing interest.
It's interesting in itself that a physics teacher comes to talk to him about stocks.
Han Zhenhua took out a Standard Chartered Bank draft that he had prepared beforehand and placed it on the table: "This is all my principal, 4000 pounds. I hope to use this as a basis to apply for financing from the stock exchange and conduct leveraged trading. I have researched a stock and believe it will have considerable upside potential in the short term."
Lin Yaodong glanced at the promissory note. Although the amount was not large, it was quite a lot for a young man who was about the same age as his daughter. At present, the exchange rate between pounds and legal tender was 1:16, which was equivalent to a huge sum of 6.4 legal tender!
He pondered for a moment and said, "Leveraged trading is extremely risky, and now, in this special period of war, the market is even more volatile."
Professor Han, what is the basis for your research? Furthermore, according to convention, even with financing, the leverage ratio won't be too high, generally not exceeding five times, since exchanges also need to control risk. Are you sure you want to take such a big risk?
Han Zhenhua interrupted him, his tone firm and confident: "Chairman Lin, I am requesting a leverage ratio of twenty times."
"20 times?!" Even Lin Yaodong, who was used to seeing all kinds of things, was taken aback, his brows furrowing. "That's a transaction volume of 8 pounds! That's 128 million yuan in fiat currency. That's insane!"
"Mr. Han, do you know what this means? If the stock price drops by 5%, you will lose all your principal, and you may even owe the exchange money. I cannot agree to such a risky operation. It is extremely irresponsible to both you and the exchange!" He was almost convinced that the young man was daydreaming.
"Therefore, I need the exchange's rules to protect both of us." Han Zhenhua seemed to have anticipated his reaction and calmly explained, "We can sign an agreement that if the market value of the stocks I purchase falls by 5%, your company has the right to immediately liquidate and sell them without my consent. In this way, the exchange will not face any risk, and the loss will be strictly limited to my initial investment of £4000. As for me, I am betting on a potential increase of far more than 5%."
Lin Yaodong was stunned. He hadn't expected that the other party would not only propose high leverage, but also come up with a risk control plan, and this plan... sounded like the exchange was indeed bearing almost no risk.
"Teacher Han, where does your confidence come from? This isn't a physics experiment with formulas and laws to follow." Lin Yaodong's gaze was sharp as a knife, trying to see through Han Zhenhua's true intentions.
Meeting his gaze, Han Zhenhua said frankly, "Chairman Lin, everyone has their own way of obtaining information and judging the market. Please forgive me for not being able to disclose details."
You can think of this as an investment attempt based on strict risk control. If I win, I get the profit, and the exchange gets the commission and leverage interest;
If I lose, I'll take all the losses and leave. For the exchange, it's a business with only profit and no risk.
A brief silence fell over the office. Lin Yaodong tapped his fingers lightly on the desk, scrutinizing Han Zhenhua. The young man's composure, confidence, and proposed solutions far exceeded his age and status.
Finally, he spoke slowly, his tone much gentler: "20x leverage is absolutely impossible, and a 5% risk control line is too aggressive. Considering that you were introduced by Xiaowen, and your... boldness, I can make an exception and offer you 10x leverage, which is a maximum trading amount of 4 pounds. That's already a huge sum, equivalent to a whopping 64 yuan in fiat currency."
However, the liquidation line must be set at 8%, and after liquidation at an 8% drop, the remaining 2% will not be refunded but deducted as commission and interest. This is the maximum concession and bottom line I can make.
Han Zhenhua quickly did the math in his head. £4, although half the expected £8, would still be a very considerable profit if he could capitalize on that market trend. The 8% stop-loss line was down by 2%, and the conditions were more stringent than anticipated, but still within acceptable limits. He knew this was probably the best he could negotiate with this cautious chairman.
"Great! Thank you for your trust and support, Chairman Lin!" Han Zhenhua decisively extended his hand. "We'll proceed with the terms you stated: 10x leverage and an 8% liquidation line. We'll sign the agreement. For safety, we'll have the British Consulate act as a third-party witness and guarantor. The guarantee fee is 5% of £4, which is £2000. I'll cover that once the funds are in place."
A hint of admiration flashed in Lin Yaodong's eyes as he firmly shook hands with him: "Young man, you're very cautious! I hope your judgment is correct!"
Lin Yaodong summoned his trusted broker and explained all the risk control terms and operational instructions to Han Zhenhua in front of him. He then drove the exchange's brand-new Stipanne limousine to the British consulate with the agreement. After Han Zhenhua presented his British passport and stated that it was to "protect the interests of British citizens" and that he was willing to pay a 5% guarantee deposit, the young British man responsible for stamping the agreement happily affixed the consulate's official seal to the three copies after receiving a small tip.
After everything was settled and he returned to the exchange, Han Zhenhua felt a great weight lifted from his shoulders.
The issues of start-up capital and the platform were resolved in an unexpectedly smooth manner.
Next, following the prompts from the mobile phone AI, on December 8, 1937, the United States initiated the first round of oil embargo against Japan (reducing supply by 30%). Upon hearing the news, the stock price of "Nanyang Oil" surged from December 9 to December 15. In just six days, the stock price of Nanyang Oil rose from 1.8 yuan per share to 5.99 yuan per share, more than tripling.