127. Just a crazy man! (On the shelves, please subscribe)

When you have investment in securities, then buying CDS is just a hedge fund.

But if you did not buy securities in advance, but bought CDS directly, then you are shorting.

Because you don't have securities in your hands, you don't have securities returns to offset the premiums per issue (money given to the CDS issuer regularly). Once there is a problem with the securities, you can ask the seller for the same value of the securities itself, which makes a profit. If the securities are all normal, then you have to pay the seller for free every issue.

...

There are many ways to short, and essentially, they are buying and falling.

However, the traditional short selling method is to first borrow the underlying assets, sell them at a high level to get cash, and then after a while, when the stock market falls, buy the stocks in cash and return them.

The premise is that you have to foresee that the stock will fall first before you can sell a lot, and use the price difference between them to obtain the corresponding profit.

Overall, it is still selling high and buying low, but it is just the opposite of ordinary holding methods.

In traditional short selling, the yield is limited.

For example, if you short a stock, if the stock falls as expected, the worst thing you can cut in half, then your shorting profit is 50% of the time you sell.

Therefore, when shorting, we usually add leverage to make a larger profit margin, and it is possible to increase it to ten times and twenty times.

But in this way, the risk factor will increase. Maybe this stock will rise slightly by a few minutes and you will lose all your money.

There is a difference in shorting with CDS.

For example, the CDS of the aviation industry is an insurance policy for the risk of corporate bond defaults in the aviation industry.

When the market is good, such companies have low default risk and cheap insurance, which may only be 30 basis points. After the epidemic spread, the aviation industry suffered a heavy blow, the airline industry's bond default risk increased to 30%, and the corresponding insurance price also increased to 3,000 basis points. If you buy CDS before and sell it at this time, the profit you get can reach 100 times.

During the 2008 financial crisis, big bears Michael Burry also used similar derivatives to make profits.

In 2020, Bill Eckman took advantage of the outbreak of the epidemic and won 2.6 billion with a cost of 27 million, which was to rely on CDS to short.

The general short selling method definitely does not have such a high yield.

Cao Yang aimed at this point, so he chose CDS.

Because the investment is small, even if you are investigated in the future, the risk can be reduced.

But once you make a profit, it may exceed dozens of times or hundreds of times.

Because the CDS interest rate spread in the aviation industry is very narrow, even if you buy, there is not much profit. Of course, the probability of loss is relatively low. Unless there will be any large-scale declines in the aviation industry in the future, Cao Yang's investment will be equivalent to paying insurance fees to others in vain.

"Okay."

Xu Hao really thinks that Cao Yang is burning because he has too much money. Unless he is very confident that the airline's stocks will fall, buying CDS and shorting will be equivalent to spending money in vain.

Just $10 million is nothing.

It's really nothing. Compared with the regular operations carried out by Goldman Sachs, a $10 million transaction is not even a fraction.

This is the bad thing about being a securities broker. After doing it for a long time, the heart will not be disturbed by the less than eight-digit numbers.

Just like a bank employee, he is obviously paid 2,000 yuan a month, but he always feels that millions of dollars are nothing.

Alas, it has expanded.

Xu Hao sighed silently in his heart.

"What about the rest? Do you need my help to buy other stocks?"

"You can buy whatever you have left," said Cao Yang. "Whether you are short or buying stocks, you can just spend 100 million US dollars."

Xu Hao:???!

WTF?

What the hell is this?

So far, Xu Hao has never encountered a customer like Cao Yang.

Others are cautious, afraid of making mistakes.

This boss is better, saying that this 100 million is not his own.

You know, this is $100 million!!!

However, based on the professional quality of the broker, Xu Hao still asked patiently, "So, I suggest you buy some Nasnak stocks, many high-tech, especially the Internet industry, which have almost fallen to the bottom now. I will buy some for you, and it should rise in the future."

Xu Hao made judgments based on his own profession.

In fact, although the US Internet bubble burst, causing the overall stock market to fall and the entire Nasdaq is falling, as a high-tech industry, Xu Hao believes that these companies can still improve in the future and return to a normal valuation level.

Now after 2000 years of bubble burst, the U.S. stock market is recovering. It is expected that the lost territory will be recovered in a few years, and the Nasdaq will also return to the original 4,000 point mark.

In this way, the Internet industry has a lot of room for appreciation in the future.

According to the words of the stock god Buffett, investing in a company mainly depends on its own value. All stock price fluctuations ultimately fluctuate based on this inherent value.

The companies you originally looked at should not be optimistic about by one or two economic crises.

What should it be or what should it be.

Eventually the market will return to its true value.

Therefore, the stock price of the Internet will rebound in the future, which is basically the common understanding of all stock speculators.

"Apple is now $7.3, and Amazon... I can buy all of these for you."

"Wait a moment."

Cao Yang immediately stopped him.

"Hmm?" Xu Hao stopped the keyboard in his hand and waited for Cao Yang, "Is there any problem?"

"You can buy it for me the opposite." Cao Yang said, "You can help me short all the things you said just now, and then you will do whatever else you want."

"Well……"

Xu Hao held his forehead with his hands in pain.

Is this man stupid?

Such a good opportunity, you don’t buy it, and you still have to short it?!

Crazy and crazy.

Xu Hao’s first intuition is—

Cao Yang is crazy.

Damn, Apple has fallen to $7, can it still fall again?!

Since the last bubble burst, Nasdaq has cut in half, falling from more than 4,000 points to only 1,600 points. How can there be room for decline?!

At this time, wouldn’t shorting be used to waste money?!

No, I think it's because I think it's too much money and I'm just burning it to play with it.

Then wouldn’t it be better for you to do charity directly?!

Can help the poor.

Before Xu Hao could speak, Cao Yang's voice came from the other side of the phone: "By the way, airline, please help me buy more, it's best to buy tens of millions of dollars."

Cao Yang continued, "For the high-tech industry, most of them will be shorted, and a small number will be bought. If you buy oil and natural gas, you can buy the others, just spend 100 million."

I did not short-sell the airline, but started many other companies. When I searched in this way, I would not find my own head.

According to Cao Yang's idea, except for that, the better, the more random it is, the less likely it is to be seen by people.

Otherwise, it will always give people a suspicion that he will know in advance that 9/11 will happen.

At that time, he will not be labeled as a terrorist?!

“…”

Xu Hao felt speechless.

Is this too messy?

Xu Hao swallowed.

Boss Cao's image in his mind is completely a gambler who has lost his mind.

No, not even a gambler.

Just a lunatic!
Chapter completed!