"The price difference between London and New York is currently floating between 80 cents and 120 cents, and our contract is roughly divided into this range." Qi Xiao returned his latest achievements with a flying speed.

"That's the average $1?"

"It's higher than this price, about $1.1. The price difference is complicated. It takes a lot of time to short and buy the crude oil contracts between London and New York respectively, and it also occupies a lot of money..."

“Raise the leverage.”

"Because it is a spread contract, we have put the leverage to 100 times."

"It doesn't matter if the leverage of the price difference contract is 1,000 times." Su Cheng said casually.

"1000 times...this..., in fact, 100 times of leverage is already a lot. When I came here, I had a margin of $200 million. The price difference was 10 cents widening, and there was a profit of about $100 million, which was 1,000 times..." Qi Xiao didn't know what to say. Although he had accepted a lot of advanced experience, the Chinese people in the 1990s still had a conservative understanding of risks. Using $100 million to pry up $10 billion is enough to make people scared. Prying up $100 billion is really a bit beyond his psychological bottom line.

Even though he knew that there was a 1,000-fold price leverage, Qi Xiao still would not make such a decision.

Sucheng is completely different. Although he has not received much financial guidance, in later oil finance activities, the spread contract is basically a compulsory course in oil finance. Any company involved in import and export of crude oil needs to consider the price difference of crude oil. Although the current price difference between London and New York is only more than 1 US dollar, it should be put in the years and months of the decades of crude oil, the price difference between London and New York often reaches more than ten US dollars. The spread contract has also become an important indicator due to the global flow of crude oil. Many financial institutions may not do crude oil futures, but will do spread contracts.

In addition to the words "Crude oil price difference", "cracking price difference" and other words, they are almost all questions that can be asked in the exam. Even if Sucheng starts from experience, it will not be doubted by 100 times or 1000 times of leverage.

However, in the years when crude oil sub-date contracts were not yet popular, ordinary traders dared not use such terrifying leverage. After all, although such sub-date contracts are impeccable in theory, their true performance still takes time to prove. A bank will not blindly bet hundreds or even thousands of times of funds for millions of dollars of profit. If there is any bug, it will cause a bank to collapse.

The reason why Soros's quantum funds are so famous is that they dare to use super high leverage and use hedging techniques like spread contracts to eliminate risks. The mathematical model of long-term capital management companies that once stood at the upper level of Wall Street can also use tens of millions of dollars of capital to leverage the market of hundreds of billions of dollars.

However, for the financial industry in 1994, these were a bit too high-end. CFD contracts appeared in the market as early as the 1970s, but it was not until 2000 that they were gradually recognized by large financial institutions. Qi Xiao had to find some small and medium-sized financial vendors who were willing to do this transaction. In this way, he seemed more cautious.

Su Cheng recognized Qi Xiao's concerns, and he should have made this decision. He smiled reassuringly and asked in a soothing voice: "What do you think about the other party? The spread trader gave a suggestion?"

Qi Xiao looked down at his feet and said, "They have suggested using higher leverage."

"How many?"

"300 times to 500 times." Qi Xiao wiped his forehead, and there was no sweat, but he felt that he should sweat.

"Then it's what they said." It's hard for Sucheng to guess how much the CFD can earn, and he finally took prudent measures, although this was beyond Qi Xiao's ability to bear it.

"Okay, in this case, our price difference contract size will be 60 billion to 100 billion US dollars. For every 10 cents the price difference between the two places will have a profit of 300 million to 600 million US dollars. If the price difference expands to 1 US dollar, it will be 3 billion to 6 billion US dollars..." Qi Xiao said, and began to touch his forehead again, and said softly: "If the price difference narrows, we will lose so much."

Whether it is US$3 billion or US$6 billion, it is hard for Dahua Industrial to bear now. They hold the most shares in Pan Asia Fund. Once the price difference narrows more, the best result also means that Dahua Industrial will be in vain. In the bad situation, Dahua Industrial may have to pay it.

Qi Xiao's reminder also made Su Cheng realize the huge risks.

He nodded slowly and said, "The average price difference between the contract we purchased is $1.1. I think the crude oil price difference between New York and London cannot be zero, so don't have any burden and implement the remaining contracts."

"Okay." Qi Xiao could only choose to rest assured. Indeed, the prices of crude oil in New York and London can be either up or down, but there is almost no possibility of narrowing the price difference to zero. Perhaps at some point, the prices of the two will be the same, but most of the time, there will always be a price difference between the two.

Especially in this range of drastic price changes, there are too few factors to narrow the price difference between the two. Spot merchants will not travel from London to North American refineries. Similarly, American spot merchants cannot choose London suppliers because of the price difference of tens of cents. The same is true for crude oil production companies. They decided a long time ago to which delivery warehouse to send crude oil. Unless the price difference is so large that there is abundant profit, it is difficult to prompt them to change such a decision.

However, things are unpredictable, especially for such big and small gambling games, all those who lost all their money died in the "big" of 13 consecutive games. You can find the boss in the casino, and who can I ask for a reason for the crude oil gambling transaction?

Su Cheng didn't dare to say with certainty that the price difference between crude oil was narrowing, but this part of the information was inferred based on known situations.

Before making inferences, Su Cheng thought a lot and prepared a lot, but now when he thinks about it again, he feels that he is not prepared enough and is not considered enough, just like a student about to be in the exam room, he always has unexplained uneasy.

"Take all the newspapers for today to me. The newspapers from all major newspapers and evening newspapers will be delivered immediately." Su Cheng left his worries behind and gave Yang Ming a reminder after Qi Xiao went out.

At this time, it was 5:30 pm.

There are still 2 hours before the end of the manual bidding, and there are still five hours before the end of the electronic bidding. If it is a normal day, oil prices should be prepared to rebound slowly, because many customers are unwilling to hold contracts overnight. They would rather make less money and close their positions before the end of the daily trading, and then re-choose the route after the start of tomorrow's trading day. Some profitable and cautious customers will also choose this way.

Only Su Cheng watched this day longer than a week, or he actually didn't want to spend the night so as not to happen again.

Yang Ming agreed and asked, "Is it all newspapers or financial products?"

"The main thing is financial, and the Daily Telegraph is also necessary, so the Sun doesn't have to send it." The Daily Telegraph is the most circulated serious newspaper in the UK, and the Sun is the most circulated S intelligence newspaper in the UK and the largest circulated newspaper in the UK. Su Cheng said as he looked at the watch again and said, "The time difference between London and Tokyo is 9 hours, right? Find some Japanese newspapers to come over and see what they say, and translate the title first."

"Are you waiting for the latest news?"

"Um."

"The Daily Telegraph seems to have an electronic newspaper, and it is said that there is real-time news, so I'll ask."

"Wait." Su Cheng asked with wide eyes: "What is an electronic newspaper?"

"It seems to be called the World Wide Web. You can see it on the computer, and there are the daily front page headlines of the Daily Telegraph and the latest news." Yang Ming was in charge of Sucheng's office. On the one hand, he was doing the work of uploading and downloading, and on the other hand, he was collecting information. He knew that Sucheng was very interested in computer technology, so he specifically understood this information.

However, Su Cheng was deeply missed. For later college students, life without the Internet was unimaginable. He also missed the Internet at first. He originally thought that it would take a few years before he could use kittens to watch outdated news online, but he did not expect that the British media was so advanced and was still inclined to the Conservative Daily Telegraph.

"Dr. Su?"

Su Cheng woke up from his dream: "Let me see this website."

After a while, a staff member came up to install and debug the computer for Sucheng.

On the 15-inch monitor on the spherical surface, the Daily Telegraph website flashed out, using IBM's WebExplorer browser from the Middle Ages, which simply made Su Cheng unbearable to see it.

I don’t know if it was IBM’s dispatch or IT staff at the London International Petroleum Exchange, while operating the keyboard, and explaining to Sucheng in detail: “We are now using IBM’s OS/2 system. The software you see is IBM’s browser. In addition to supporting HTML3, the most powerful thing is to integrate emails and news. With just a few small steps, you can see the Daily Telegraph website you want.”

"Integrated email and news functions? So powerful?" Su Cheng looked at the IT man in front of him with a sad look, completely feeling nothing about his excitement.

The IT man smiled and looked at Su Cheng with a pitiful look, thinking proudly: He should faint now, probably he doesn't even know what the browser is.

Sure enough, Su Cheng said in English: "You come and help me, I want to read today's news."

Sucheng had no feelings for this bulky and dull IBM computer.

IT men are happily operating the computer and feeling the pulse of technology.

"Tell me if you have new news." Su Cheng read the new news today, and there was nothing worth paying attention to.

The IT man naturally said: "Whenever you want to see new news, you click this button to refresh..."

"You can do it. Click a little later and tell me new news." Su Cheng pushed away the chair and sat on the sofa and read the newspaper.

The IT man had to sit stupidly and refresh the page.

I don’t know how long it took, but a news suddenly popped up.

"There is new news." The IT man's voice was as dull as if he was shopping with his wife.

"What's the content?" Sucheng was still scanning the newspaper.

"Azerbaijan announced that it would not reduce its output...Barabala...Kazakhstan will continue to build its own oil field...OPEC will not reach a production cut agreement in the short term, and the crisis of oversupply in the crude oil market will further ferment..."

"Show me." Su Cheng bounced up from the sofa and flew to the 15-inch spherical monitor.

Today's websites are even simpler than later blogs and Weibo, but the text is very clear.

It was indeed the news in the style of the Daily Telegraph.

Su Cheng glanced over at a glance, and saw half of it, he grabbed the phone and said in a deep voice: "Prepare the S plan, contact Aliyev, and if you confirm the negative news, implement it immediately."

Plan S is the best result that Sioux City is waiting for. If Azerbaijan and Kazakhstan continue to increase production and OPEC cannot provide an appropriate plan, no matter how the market interprets it, a situation of crude oil surplus will be formed in the short term.

The outcome of crude oil continuing to decline will be irreversible.

With OPEC's consistent efficiency, the time required to give a plan should be calculated in at least weeks.

It is difficult to convincing oil ministers from 12 countries and leaders from 12 countries to reach quick conclusions even in the most urgent situation.
Chapter completed!