期货，为什么总是拉爆债市、股市、油价？ 资本世界的多空大战有多凶残...

Hi~ Friends, today we are going to use a series of very exciting and classic examples to talk about the struggles of capital around futures.

around futures.

How can such a normal financial derivatives explode the bond market the stock market and the oil price.

What is the logic behind this?

There is a very famous "327 Incident" in the Chinese financial market.

An ordinary treasury bond futures transaction lasted only 8 minutes 8 minutes, but the capital battle triggered a huge shock in the entire market causing the China's treasury bond futures trading to be suspended for 18 years.

It can also be said that it indirectly reshaped the entire China's financial regulatory system.

This "327 Incident" occurred in January 1995.

There was a treasury bond futures contract code-named 327.

This futures contract itself was actually nothing special, but at that time, the Ministry of Finance had a certain policy of preserving the value of treasury bond As to the specific number no one knew it was set by the ministry So the market was greatly divisive on this which created great uncertainty and thus two forces of gambling emerged.

The long side was mainly China Economic Development Trust and Investment Corporation, while the short side was mainly Wan Guo Securities and its ally, Liaoning Guofa Group .

Therefore, the long side was "China Economic Development" and the short side was "Wan Guo" and "Liao Guofa".

Everyone was actually betting on whether the next subsidy the next subsidy would be higher or lower.

Wan Guo's analysis was that he was more confident that the preserving subsidy had peaked and the price of treasury bond futures would definitely fall, so they joined forces with Liao Guofa to launch a massive short selling, with a total of about 400,000 short orders.

The price of the 327 Treasury bond futures was fluctuating between 147 and 148 at the time.

However, not long after, on February 10, Wan Guo was hit hard.

The Ministry of Finance announced the hedging subsidy rate for March which hit a new high.

The futures price rose and broke through 148 yuan.

Wan Guo was in a difficult situation.

This situation did not seem to be favourable to them.

Should they cut their losses and leave the market at this time or hold on and wait and see?

So after a heated internal discussion, they felt that they should still trust their own judgment.

The price would definitely drop after the subsidy , so they decided to double down on the short selling, increasing it from the original 400,000 lots to 800,000 lots You see, from this point on, he was going to fall into this death spiral.

In the next few days, the futures price started to rise from 148, and Wanguo was really confident.

The short position continued to increase to 1.4 million lots.

So at this time, he had already put himself in a difficult position.

In fact, although the original position of 400,000 lots was not small it was normal for Wanguo's size.

But now it has more than tripled, and the fate of the entire company is at stake.

He can only hope that the Ministry of Finance will really reduce the subsidy.

Do you think it is possible?

In fact, it is not that the Ministry of Finance cannot reduce it at all, but if it really reduces it then what are we talking about here, right?

On the night of February 22, Wanguo was hit hard again.

The Ministry of Finance issued the first and second announcements of 1995, announcing the 3-year The treasury bond interest rate was 14% and a hedging subsidy was implemented In short, it was a major positive for treasury bonds.

The next day, on February 23rd, futures price jumped directly to 149.5 an increase of 1.3 yuan from the previous day's closing price Don't think that 1.3 yuan doesn't sound like a lot.

Although the treasury bond price is not as volatile as Bitcoin the problem is that both the bulls and bears at the time added 40 times leverage For Wan Guo Securities, every 1yuan increase in the futures price did not result in a loss of less than 1%, but a loss of nearly 30%.

Let's calculate based on the 1.4 million short-selling contracts at the time.

For every yuan increase in the treasury bond futures, the corresponding loss was 280 million yuan.

You may think that hundreds of millions of yuan are not much for such a financial institution, but this was not the case in 1995 it is also a huge amount of money for security company like Wan Guo.

In 1994, Wan Guo's net assets were less than 2 billion.

This transaction seemed ordinary.

For every yuan increase in the treasury bond futures, he lost 280 million.

Who can bear this Well, all the things we just said were actually background.

Now the situation is actually clearer.

That is to say, the price of this treasury bond may continue to rise.

In this situation, the bulls and bears ushered in the final decisive day.

the bulls and bears ushered in the final decisive day.

On February 23, 1995, the futures opened at 149.5.

The competition between the bulls and bears was still quite fierce.

Wan Guo relied on its capital advantage to suppress the price to less than 149.

The bears once had the upper hand, but at this time, you have to think clearly for Wan Guo and Liao Guofa What is their purpose?

We just said that the situation is very clear now.

The price is going to rise.

So, as a short seller, Wan Guo’s goal is to buy treasury bonds at a lower price so that they can close their short positions.

How can the price go down?

You must first lower the price.

If you want to lower the price, you have to short more futures and increase your short position.

So the ideal situation is that I spend 10,000 to lower the price and then buy 20,000.

Then, I lower it by 10,000 and buy 20,000 again.

This is more ideal.

The problem is that the fundamentals are not there.

How can so many people be willing to short ?

At this time, the short sellers in the market are mainly Wan Guo itself.

So soon, another large wave of bulls rushed in to buy 327 treasury bond futures.

By noon, the price was pushed to more than 150.

Guan Jinsheng, the president of Wan Guo Securities, even went to the exchange to ask if they could suspend trading or cancel some previous transactions but was rejected At this time, the bullish power in the market had become overwhelming and at this moment, Wan Guo once again met his former ally Liao Guofa seeing that the situation was not good, he decided to close his short position of 500,000 lots.

In fact, just closing the position might be fine, but he changed sides and bought 500,000 lots instead, completely standing on the opposite side of Wan Guo, causing the futures price to jump another two yuan to 151.98.

At this time, it was not long before the market closed, and Wan Guo actually had no way out.

If he chose to surrender and close the position at this time, it would mean that he would have to buy a lot again Then the market is about to close, and you want to buy so much there may not be so many people selling which means that the price may have to be raised by several yuan again.

This is actually no different from declaring oneself bankrupt.

You see, a seemingly ordinary transaction has now forced the giant Wan Guo Securities into a dead end.

But it is not over yet.

The 8 minutes are not over yet.

Wan Guo, who has no way to retreat, thought of a shady trick.

I will fight you to the death.

Using the power of my capital and the characteristics of futures margin, I will concentrate all my strength to fight the bulls .

I will go short with all my strength.

You think that once the price drops the bulls will ask for the margin.

The price must drop enough.

If the margin cannot be paid, the bulls will be squeezed out and forced to close their positions and sell.

Then I, the short seller, can take the opportunity to buy.

At this time, a short seller can take advantage of the opportunity to buy, not only can he close his position smoothly but he may even make a lot of money.

You see, this margin system gives the short sellers the last chance to compete with the long sellers in pure capital strength.

There are no fundamentals, no price "should" be, and there is nothing The only purpose is to force the liquidation Only by "killing" the other can short sellers "live".

So before the market closed, the market ushered in the legendary "Crazy 8 Minutes".

Wan Guo concentrated all its financial strength to frantically short 327 Treasury bond futures.

First, 500,000 lots pushed the price from 151.3 to 150.

Then it continued to increase its position and pushed the price down, breaking through 150, 149, and 148.

The last sell order was a staggering 7.3 million lots.

The short orders created in these 8 minutes estimated that there were a staggering 20 million lots of which more than 10 million were traded.

What does 10 million mean?

The face value is 200 billion which is equivalent to a market value of 300 billion in treasury bonds.

This is more than 9 times the nominal issuance volume of 327 treasury bonds With its powerful short-selling power, Wan Guo squeezed out many bulls in the market.

In the end, there were no bulls left in the at the end of the market, he drove the price from 151.3 to 147.4.

With these 8 minutes of operation he made billions of dollars .

Throughout the day, the face value of the entire 327 treasury bond futures market reached a staggering 850 billion yuan equivalent to 14% of the national GDP that year.

I'm getting excited just talking about it.

Wan Guo Securities' practice is definitely illegal.

It seriously exceeded the exchange's order limit.

It seriously exceeded the exchange's order limit and no initial margin was paid.

And the most important thing is that this is clearly a form of market manipulation and market distortion.

Before Wanguo Securities could celebrate, the Shanghai Stock Exchange held an emergency meeting that evening and announced that all abnormal transactions within the 8 minutes would be invalidated The closing price was adjusted from 147.4 to 151.3.

Wanguo Securities' profit instantly turned into a loss of 1.4 billion.

This was really a blow that could not stand up.

Later, in order to prevent Wanguo Securities from being hit by a run, Shanghai Stock Exchange and other financial institutions urgently raised 1.5 billion yuan to help Wanguo Securities with its cash flow.

However, Wanguo Securities was still on the verge of bankruptcy after this incident and merged with Shenyin Securities to form Shenyin Wanguo which was later merged into the current Shenwan Hongyuan.

Wanguo's president at the time, Guan Jinsheng, was later sentenced to 17 years in prison.

Liao Guofa was investigated for market manipulation and financial fraud, and the person in charge fled.

Three months later, the State Council suspended the pilot program of treasury bond futures.

It was suspended for nearly 20 years until it was restarted in 2013.

You see, although this was a relatively early event, this incident fully demonstrated the impact of high leverage in futures trading, which can easily lead to a forced liquidation A forced liquidation means that due to high leverage, the other party suffers heavy losses through a slight change in price and cannot pay the margin You see, Wan Guo was forced into a desperate situation because of insufficient margin and it also

used the high leverage of futures to fight back and forced the bulls to close their positions.

One incident with "double squeeze" occurred .

Let me tell you that there is actually a more extreme forced liquidation in futures trading.

Because many futures contracts normally need to be delivered upon maturity, the short position needs to deliver the physical goods to the other party as agreed upon upon maturity.

For commodities like crude oil, gold, and soybeans, it is all like this.

So, if the bull holds enough long futures contracts, which is more than all the spot commodities in the market combined, it means that there are bound to be some short positions who will not be able to deliver the goods as agreed no matter what.

In order to avoid default before maturity, they will try very hard to close their positions Imagine that people are desperate, and you push the other party to dead end now is the time to invest more and make money.

Let's discuss it in depth.

Have you ever thought about why the number of futures contracts exceeds the number of spot contracts?

Where do so many futures come from, right?

Who stipulates it?

It's like a stock IPO or a company's bond issuance.

Do I need to report the amount I issue to the exchange?

Let me give you an example.

Let's understand how a futures contract is actually produced.

For example, I planted a tree.

Let me tell you, this tree is amazing.

Other people's trees bear fruit, but my tree grows milk tea.

The kind that comes with tea, milk ice cubes, and a straw.

You can just pick it from the tree and drink it.

This milk tea tree is the only one in the world.

It 's amazing.

For example, it can grow 100 cups of milk tea every six months.

I sell them on the market.

At the same time, the exchange sets up a futures contract for the milk tea that this milk tea tree can produce.

For example, the code for the one expiring in December is called MTZ5, which means Milk Tea expiring in December 2025.

which means Milk Tea expiring in December 2025.

In the market, as long as someone wants to buy this milk tea futures and someone wants to sell it and the prices match, the exchange will automatically pair you two up, and a new futures contract will be automatically generated.

If there are 1 million people who want to go long and 1 million people who want to go short, 1 million contracts will be generated.

Conversely, if both buyers and sellers want to close their positions and the prices match, one contract will disappear.

Therefore, the number of futures contracts is not fixed like stocks.

It depends on the supply and demand of the market and is not limited by the scale of spot trading.

Although I only have 100 cups of milk tea at the expiration date but theoretically its futures market can be infinite.

Then, can you easily imagine that if only 100 cups of milk tea can be delivered in the end, I can go long on 10,000 cups of milk tea futures.

No matter how high the market price is, I won't sell it.

In this way, as for my opponent's airdrop, either he will breach the contract and pay a large fine and compensate me , or he will panic and go long and close his position before the futures expire, which will drive the price to a very, very high level.

At this time, I will close my long position and take a profit.

I have formed a more pure milk tea futures short squeeze.

This example is very extreme.

There are only 100 cups of milk tea in the market.

In fact, it is also to help everyone understand the short squeeze more intuitively.

In fact, for a more mature market with many players and a very large scale such a short squeeze situation rarely occurs.

However, for a futures market with not so many players and the number can be counted on two hands, such an extreme short squeeze battle may occur .

Nickel is a metal that is widely used in various alloys, such as stainless steel and high-temperature alloys, so naturally, there is a nickel futures market.

And the protagonist of this story is Tsingshan Holdings .

It is the world's largest stainless steel company and the world's largest nickel producer.

Its annual output accounts for about 1/4 of the world's total For the nickel futures market, which is not very large, Tsingshan Holdings is definitely a giant.

Whether it is actual output or in the futures market, it can be said to have a dominant position But in 2022, something went wrong.

At the beginning of 2022, the Russo-Ukrainian war broke out Russia began to be economically sanctioned by Europe and US Russia happened to be a major nickel producer.

As a result, the nickel produced by Russia could not be delivered at all.

You can imagine that the nickel futures market has so much less deliverable, so the price of nickel will naturally rise.

Rising from less than US$20,000 at the beginning of the year to more than US$24,000 per ton.

At this time, there was news in the market that Tsingshan Holdings had a large number of short positions, about 150,000 tons Some people said it was 200,000 tons.

Why did he have so many short positions?

It may be because he is a nickel producer and needs to hedge, or it may be that he is simply speculating.

We don’t know and it is not our focus today.

In short, he holds more than his short-term production.

The problem is that the nickel produced by Tsingshan cannot be delivered directly because the futures delivery requires pure nickel, and Tsingshan mainly produces ferro-nickel and high-grade nickel matte, which are not pure enough.

SO hedging is no problem for short selling but he cannot deliver the nickel he produced.

You see, at this time the pandemic has caused a decline in nickel productivity, and Russia has been sanctioned.

Nickel stocks are still very limited.

The actual spot nickel inventory was less than 80,000 tons less than half of the previous years, while the scale of the nickel futures market exceeded 1.1 million tons, 15 times that of the spot market.

This is obviously too much, right?

It's like there are only 100 cups of milk tea in the market, but someone has a short position of 1,500 cups of milk tea.

This is very difficult for short squeeze players.

It was a perfect opportunity for investors A large amount of speculative capital rushed into the market to buy nickel futures and squeeze out the short squeeze.

Starting from March 2022, the price soared.

On March 1, the price of nickel was about $24,000 per ton.

By the evening of March 7, the price had doubled to over $50,000 per ton.

The more it rose, the more the shorts lost.

At that time, the leverage in the nickel futures market was about 10 times.

Although it was not as high as the 327 Treasury bonds but it was highly volatile.

Therefore, Tsingshan Holdings was soon required by the exchange to pay billions of dollars in margin.

He simply could not come up with so much cash at the moment so he had to urgently find banks and brokers to help advance the payment.

The previously calm futures market felt like a small-scale tsunami that came so suddenly and really caught people off guard.

In fact, the capital for short squeeze at this time was not so determined.

They were also afraid that like Wan Guo in the 327 incident, they would make a desperate counterattack and sell short crazily to compete with them for capital But later, seeing that the nickel price continued to rise short sellers began to retreat step by step.

They felt that the possibility of this happening was not great.

so the capital for short squeeze by the bulls gathered more and more .

Didn’t they just say that it rose to 50,000 on March 7?

The bulls’ attack was not over at all.

Starting in the early morning of March 8, London time there was another wave of crazy sweeping.

The price doubled from $50,000 to more than 100,000 US dollars.

If this continues, Tsingshan will face a loss of up to 10 billion US dollars The losses from forced liquidation might have doubled.

He was on the verge of collapse, and the bulls were about to declare victory when a mysterious third force intervened in the market.

Who was it?

The London Metal Exchange (LME) announced an emergency trading halt at 8:15 a.m. on March 8.

And unprecedentedly it announced that all futures transactions after midnight that day, approximately 9,000 transactions would be invalidated.

void Let me add From the example just now did you feel that this exchange was always playing tricks and invalidating transactions at every turn ?

Well this actually rarely happens because we are talking about more extreme examples, so you may feel that the exchange always resorts to this But at that time, the LME's emergency suspension and invalidation of transactions was really something that could be said to save Tsingshan Group.

From the perspective of the exchange, this short squeeze disrupts market order.

Secondly, they probably don't want such a large client as Tsingshan Holdings to go bankrupt.

But the hedge funds that want to short squeeze certainly don't think so.

The rules of the game are written in black and white.

I play by the rules.

You are the clearing house and you can't take the lead in cheating.

In our previous example, China is indeed in the early days of futures trading.

China is indeed in the early days of futures trading.

The exchange's withdrawal is understandable, but the LME London Metal clearing but the LME London Metal clearing a global exchange, also does this.

How can it be allowed?

So many bulls have jumped out to sue the LME.

And what's interesting is that under normal circumstances We don't know who's behind this exciting short squeeze, because the futures market is so mysterious.

But this time, they've all sued LME, so you know who it is.

Who are they?

Elliott AQR and Jane Street I guess many people aren't familiar with them but people on Wall Street or in the financial world definitely know these famous hedge funds.

These people have a keen sense of smell, and they're ruthless After the market was suspended for a few days, the market returned to rationality.

Tsingshan Group also reached a silent agreement with brokerages, creditors, and others, meaning that brokerages won't care if you ask for more margin.

But Tsingshan, you should quickly cut your losses and close your positions.

Tsingshan is rumoured to have been involved in this short squeeze The loss of about $1 billion in the short squeeze was considered a lucky escape.

And his broker, JPMorgan Chase, also escaped by chance.

In fact, of the 150,000 tons that Tsingshan shorted, 100,000 tons were traded directly in the futures market and the other 50,000 tons were held over-the-counter through transactions with JPMorgan Chase.

When Tsingshan was squeezed out and faced a loss of more than $10 billion, wasn't it impossible to pay the margin?

JPMorgan Chase was caught in the middle and was almost scared to death.

They discussed it all night, but we don't know the reason behind the cancellation of those LME transactions was JPMorgan behind it but in short, JPMorgan also lost a lot of money from this transaction, about $120 million.

As we just said, the boss of AQR, one of the short squeeze capitals came out and later posted a tweet mocking Tsingshan and JPMorgan.

He said, "oh I'm so happy to see that JPMorgan and the big guys only suffered minor injuries.

The LME is also very good.

They didn't break the law at all It 's so heartwarming.

After this power play UK also fined the LME clearing house 9.2 million pounds.

The nickel market slowly returned to its former calm This is a very typical example of a futures short squeeze.

There is not enough spot in the market.

The short sellers were forced into a corner and had to panic buy to close their positions.

You still see some of this from time to time, but there is another type of squeeze that is less common.

It's not a short squeeze but a long squeeze .

The term "long squeeze" sounds very awkward, right?

because it's very rare The example we are going to talk about below is the famous negative oil price event.

The outbreak of the pandemic in 2020 caused a collapse in global crude oil demand.

Both spot and futures oil prices began to plummet.

At the same time, OPEC+ production cut agreement was not reached, and Saudi Arabia and Russia were involved in a small price war causing oil prices to fall all the way from $60 at the beginning of the year to $20.

The continuous decline in oil prices aroused the desire of many people to buy at the bottom.

A large number of people here came from the far east and Asia.

When everyone saw that the oil price was so low, how much lower could it fall ? It couldn't fall to 0, so a large number of retail investors mainly from China, South Korea, and India, wanted to buy at the bottom of the oil price How did they buy at the bottom ?

Most of them were not professional investors, and they would not directly go long on crude oil futures So, the financial institutions at the time saw this demand and provided everyone with this so-called "paper crude oil" product to help retail investors indirectly go long on crude oil futures.

A typical example here and one that later had problems was the "Crude Oil Treasure" launched by the Bank of China Paper crude oil is called Crude Oil Treasure.

For retail investors, it is a simple financial product.

Financial institutions such as Bank of China act as intermediaries.

In order to hedge the risk, they will go to, for example, the CME in the United States to actually trade the corresponding crude oil futures , which is equivalent to trading crude oil futures for these retail customers This laid the groundwork for the subsequent collapse.

What does negative oil price mean? It means

that I give you crude oil for free and you also pay extra money.

Doesn't it sound incredible?

The financial market now is really eye-opening.

It is completely different from what you learned in textbooks.

Interest rates can be negative, and futures can also be negative.

Let's briefly analyse why it falls to negative.

It is because someone is forced into a desperate situation and has to sell even if it is negative he still wants to sell Why is he so anxious to sell?

It is because he has to deal with the long positions in his hands.

I must close position.

Why close position in a hurry?

Because if you don't close you will face physical delivery at maturity Then there will be truckloads of crude oil delivered to me .

Why would I do anything and even lose money rather than have truckloads of crude oil delivered to my door?

There are two main reasons for this.

First, the oil storage tanks at that time were seriously insufficient For normal commodity delivery, you may think that if it is delivered I can just accept it.

What's wrong with some gold ?

If the oil comes, I don't want it.

I can just find a river to dump it. Isn't that right?

This is really not allowed.

It is illegal to dump this oil in any country.

Moreover, this delivery has very strict geographical restrictions.

It doesn't mean that you can just make a phone call and say, "My oil is in a village in South Africa, it belongs to you."

This is definitely not allowed.

Look at the delivery of WTI crude oil futures.

The terms clearly state that delivery must be made through the Cushing oil storage facility or pipeline.

Cushing is a small town in Oklahoma a global oil refining center.

Its storage capacity can reach 90 million barrels at full capacity.

You can imagine the problem.

At that time, due to the sluggish demand for crude oil Cushing's oil storage capacity had exceeded 80%, and the remaining part was basically rented out.

Moreover, the rental cost was very high, so even if people were willing to deliver the oil, it would be difficult for you to accept it.

This is one of the reason but this alone would not lead to negative oil prices.

The second reason is that there are too many retail investors among the bulls this time.

They would rather lose money than actually take over the oil.

Just think about it, can you take it, right?

So they must close their positions before maturity In fact, as intermediaries, these banks also know that retail investors must close their positions.

Therefore, many paper crude oil intermediaries will close their May positions a few days in advance and roll them over to June futures.

This practice is very common in the futures market It is called "Roll" in English.

Roll to the back Chinese name is particularly nice, called "移仓换月" - Rolling positions to the next month which means I move my positions to the next month.

It is so poetic.

But the Bank of China made a mistake at that time For some unknown reason, it failed to move positions and change months in advance, resulting in closing positions only two days before delivery At this time, the liquidity in the market had begun to plummet.

You see, these two reasons insufficient oil storage tanks and too many retail investors who are bottom-fishing.

These are special phenomena that emerged after the outbreak of the pandemic .

In addition, some institutions, including the Bank of China, failed to move positions and change months in advance which laid the groundwork for the subsequent epic plunge in oil prices.

On the morning of April 20, 2020, this was two days before the May futures delivery was blocked, there were still 130,000 futures contracts in the market that had not been closed.

Among them, the long positions held by retail investors through financial products accounted for about 2/3 which was a very large proportion These 2/3 positions had to be sold and closed within these two days.

If you were a hedge fund speculative capital, what would you do?

You would definitely short sell.

I would hold on to the short positions in my hand and not close the positions, pushing the price down further.

Anyway, no matter how much the price fell, you small retail investors had to sell before the market closed.

At that time, in order to ensure that the positions were closed on the same day, many longs placed a TAS order (settlement price order).

That is, I told the exchange that I had so many futures contracts on hand please follow the settlement price before today's closing and sell it Whatever the market price is, I will sell it at that price.

In fact, it means that you sell all before the market closes.

This TAS is actually quite common for relatively small orders but the volume of TAS orders that day was so large that more than half of the positions in the market had to be sold before the market closes, and they had to be sold no matter how low the price was.

So, in fact, this TAS is a very important reason for the decline in oil prices I won't go into too much detail about this mechanism.

In short, in the end it turned into a game between the bulls and the bears.

The main players on both sides needed to close their positions before the market closes, but the key is to compete for the oil price in the few minutes before the market closes.

the higher the oil price is the higher the selling price of the bulls, and the happier they are to make money Conversely, if the closing price of oil is lower, the more money the bears make.

In fact, there is no logic on both sides.

They are just competing before the market closes to see who has stronger capital and who can push the price to a place that is more favourable to them.

This kind of battle between bulls and bears has actually occurred many times in history.

The risks for both sides are very high because you don't know how deep the other side's bottom is or how many cards they have.

For both sides, the more money you invest, the more favourable the price will be to you, but at the same time, if you lose you'll lose even more The more money you invest in the greater the chance of winning and the greater the compensation.

Both sides will continue to invest more and more until one side is completely defeated.

This is also called a margin call in futures.

The risk of a margin call is so high you can see that the shortsellers was actually a very tentative attack.

They were also afraid that a big buyer would suddenly appear in the market and go long.

But this time, the situation was indeed very favourable for the shortsellers.

Because the bulls mostly bought on behalf of retail investors they actually had less incentive to invest more capital and pay out of their own pockets to fight against the short sellers on Wall Street.

This led to the one-sided situation of the shortsellers.

At 9 am on April 20th, the market was still calm, and the futures price was around $18.

The shorts began a tentative short-selling attack but found that there was no resistance in the market.

A simple sell-off caused the price to fall further The more capital there was to short sell, the more bulls started to close their positions when they saw that things were not going well.

They even joined the short selling team.

From noon on, the oil price fell below $10 and $5 without any resistance.

At 2 pm, it fell below $0 but it still showed no sign of stopping and continued to fall.

Because even at $0, the bulls were still unwilling to deliver.

There were no buyers in the market.

The whole market was short selling Four minutes before closing at 2:26 the oil price fell to -$15.

At 2:28, it fell below -$20.

A minute later, it fell below -$30.

At 2:30, it closed and even broke through -$40.

According to calculations, the average price of the last three minutes was -$37.63 This price was also It has been officially recorded in history, and there will probably be many more classic cases in textbooks in the future.

This time, the exchange is the famous CME.

It no longer does the kind of things that were previously done without a say-so.

The bulls including the retail investors behind the crude oil treasure, were forced to sell their positions at a loss.

A very conservative estimate is that the loss on this day alone exceeded $4 billion.

Look at this screenshot.

This investor bought 20,000 barrels of crude oil at an average price of 194, and the closing price was negative 266.12.

This is RMB the closing profit and loss is over 9 million, right?

Later, the Bank of China covered part of the retail investors' losses.

The price of the short position that is, the negative part, was fully covered by the Bank of China, and 20% of the client's principal was compensated.

It is estimated that the loss exceeded 6 billion yuan.

Who are the ones who make money?

Of course, it's the short sellers who successfully forced a margin call.

Regarding futures delivery, I remember a very classic story.

During the 1980s, Solomon Brothers was a very powerful investment bank at the time They had a novice trader who was responsible for helping clients trade CME live cattle futures.

As a result, due to an operational error, he didn't close the position when he should have, so he had to actually collect the cattle.

He asked his boss what to do, but the boss didn't know either.

He said, "You caused the trouble yourself, so you should deal with it yourself.

So this newly graduated guy ran to a place 3,000 kilometers away from New York and collected more than 40 live cattle by himself.

But he couldn't sell the cattle immediately at the market, so he kept them for another week and waited until the next week to sell them at the auction .

So you see, the physical delivery of futures is not only the seller's obligation, the buyer's obligation is also.

You see, the three stories we just talked about are all life-and-death battles between bulls and bears.

Do you feel that this futures market is so dark and dangerous, just like a casino Actually, it's not like that.

I have to go back and tell those stories because they are so exciting and classic, but I don't want to distort everyone's understanding of the futures market.

These battles between bulls and bears these forced liquidations, are just a side effect of futures The reason why futures trading volume is so huge and can be used so widely is essentially because it is a huge risk trading market or a position trading market.

It trades not assets or commodities, but positions, and the risks behind this are actually...

are actually...

The futures market is a bit like gambling.

In each contract, the long and short sides are completely symmetrical.

If you make money, I lose money, and if you lose money, I make money.

The risks on both sides are completely opposite.

From the perspective of a single transaction, it is indeed a zero-sum game The entire futures market worth tens of trillions or hundreds of trillions of dollars is a huge zero-sum game market.

Does that mean that such a large market is a huge casino?

Will there never be a win-win situation?

Of course not.

The futures market actually optimises global risk management through risk trading For example, participants in the real economy need to go long or short on related commodities to hedge their business risks.

Leveraged funds and hedge funds do pursue speculation but if you look at it from the perspective of the entire market, they are helping the market to achieve price discovery because they are more professional.

They will hire the most professional people to quantify.

For example, how much this Treasury bond should be worth, how the demand for crude oil might change in the second half of the year, what will the rainfall rate be in Florida next month , and if I find that the pricing of a certain futures contract is unreasonable, I will rush in to make money by arbitrage, but at the same time, I will also push the price of this futures contract to a reasonable level.

This is an example of risk transfer.

Let me give you another very common phenomenon.

If we look at the entire market, asset management companies and insurance companies are all going long on Treasury bond futures.

Here, I mainly refer to US dollar Treasury bond futures.

They have investment needs, hedging needs and need to go long on the bond market However, due to capital restrictions and repurchase restrictions, if they buy Treasury bonds the cost is much higher than going long on futures, so most people will choose to go long on Treasury bond futures directly.

The scale of Treasury bond futures is now close to $1 trillion Their counter-parties are mainly some leveraged funds that are shorting Treasury bond futures.

These funds have no capital restrictions The cost of investment is also low so they can take over this part of the risk.

But they are not just betting on the decline of treasury bonds.

Instead, they may go long on treasury spot bonds to hedge the interest rate risk.

Therefore, these leveraged funds are actually taking advantage of the basis difference between treasury futures and spot bonds.

It's just that their leverage will be very large else why would the be called leveraged fund This is actually a very mainstream model in the market.

It optimises the division of risk through futures.

This is why I say that the futures market is a very transparent and liquid risk trading market.

Of course, the freer the market, the stricter the supervision and laws you have to comply with.

Just like the more advanced the means of transportation, the stricter the traffic regulations.

If you invent a car, you have to equip it with traffic lights, sidewalks and various traffic regulations.

In fact, the same is true for the futures market.

Now the speed of the entire market is getting faster and faster.

The traffic volume is also increasing and the corresponding regulations are also becoming more stringent.

What we just talked about is purely for the purpose of profiting by "killing" the other party.

This kind of forced liquidation behaviour is actually the kind of traffic accident that major exchanges are trying to avoid.

Well, through these two videos and more than 20,000 words, I talked to you about futures.

Isn't it interesting ?

You have watched all the way till here why don't click "like" before leaving.

That's it, bye.

On March 1 the price of nickel was about 24,000 yuan per tonne By the evening of March 7, the price had doubled to more than $50,000 per barrel per tonne