Chapter 1213 Put Options
"Cloud Business?" Helen blurted out.
Xu Liang looked at her in surprise, "Did you guess?"
"Facebook is benchmarked against the Penguin in China. I found that Penguin has also established a 'cloud business' department, and I knew that Facebook will do the same business in the future."
Xu Liang nodded, "Cloud business includes cloud storage, cloud computing, and even involves advanced technologies such as artificial intelligence. If any Internet technology company wants to maintain its position, it must invest huge amounts of money in the 'cloud business'.
Now Amazon's AWS and Microsoft's Azure have won many customers.
Facebook is not as capital as them now, nor does it have their superior hardware conditions, and wants to catch up with them or even surpass them in the cloud business.
What should I do? ”
”Internet speed? "
Xu Liang nodded: "The current fatal weakness of AWS and Azure is "network capacity".
After all, no matter how high the cloud computing technology is, the data centers of major cloud service giants still need physical fiber to achieve data transmission.
For Facebook, which has an optical fiber network, can add DWDM (intensive optical wave multiplexing) devices to both ends of the fiber. DWDM connections can be amplified using optical amplifiers, which are suitable for large-capacity data transmission and connection solutions.
With the fiber optic network to connect to data centers located around the world, Facebook Cloud will be able to provide users with more stable and faster services. "
"If this happens, we need to invest heavily in fiber optic networks, especially across the ocean and connecting to fiber optic networks in all English-speaking countries. "Helen said.
"Of course, but you don't have to take too much steps for the time being. With no losses, just develop Facebook's fiber optic network.
When the conflict between Internet companies and telecom companies is irreconcilable, we will make a big investment.
I believe that by then, Facebook had already been listed and there was no shortage of funds. "Xu Liang said.
You can make a little cheaper one, and when you can't make a fortune, work harder and do it alone.
"Yes. ”
——
"Lehman Brothers, average price of $60.05, short selling 20 million shares."
"Bear Stearns, average price of $74.44, short selling 18.5 million shares."
"Citibank, average price of $49.06, short selling 15 million shares."
"Merry Lynch, average price of $49.45, short selling 16 million shares."
"Bank of America, average price of $38.5, short selling 18 million shares."
"
"Bank of America, average price of $38.5, short selling 18 million shares."
"
"AIG Group, average price of $57.91, short selling 22.5 million shares."
"JP Morgan, average price of $45.72, short selling 13 million shares."
"Morgan Stanley, average price of $47.39, short selling 14 million shares."
"Wells Fargo, average price of $28.21, short selling 14 million shares."
"Mertain Bank, average price of $37.65, short selling 16.5 million shares."
"Wells Fargo, average price of $28.21, short selling 14 million shares."
"Mertain Bank, average price of $37.65, short selling 16.5 million shares."
...
Looking at the paper printed on the table, Belankfan scratched his big bald head.
"It's really cruel! The four major investment banks in the United States, the five major banks, and the world's largest insurance group AIG, are all caught in one go."
Fabrice Thorre, vice president of Goldman Sachs, was sitting opposite Berlankfan, spread his hands, "Obviously everyone misunderstood Paulson. There is no doubt that this guy is the biggest short seller."
Berlankfan nodded, "He has a pessimistic view of the economic situation after the subprime mortgage storm, and is sure that financial stocks are the hardest hit areas.
I just didn't expect that he was so cruel that he didn't even let his old friend Morgan Stanley go. "
Speaking of this, Belankfan looked at his subordinate in front of him with a smile, "Do you think he shorted Goldman Sachs? "
Fabris was stunned at first, and then reacted, "You mean... we shorted Morgan here, and we shorted us on Morgan's side? "
Berlankfan smiled slightly, didn't say anything, and acted very calmly.
But younger, Fabrice, who was only 29 years old, performed differently. He said angrily: "How can he do this? Is this treating us as fools? ”
Belankfan waved his hand gently, "No need to do this. Shorting is a market behavior. If the time is ripe, I want to design some put options from Goldman Sachs to sell."
Fabris was dumbfounded. What kind of slutty operations are these?
Berlankvan laughed. "You are still young and don't understand many things. I admire the Chinese idiom that Jin Caesar often talks about - go with the flow." Fabris was still confused, and Belankfan had already started to drive people away.
"Go and match our big customers with points of rival trading.
Instead of enough trading volume, our VIP customers dare not sell short on a large scale, for fear of breaking the stock price."
Fabris nodded and stood up and went out.
Berlankfan held the document in his hand and felt deeply moved.
I had long guessed that Kim Caesar would play big this time, but I didn't expect it to be so big.
And he believed 100% that what Goldman Sachs and Morgan received was definitely not all of the short contracts of Kim Caesar, not even half of them.
He must have more funds, in financial institutions in the United States, Europe, and even Asia.
But it doesn't matter, it's enough for Goldman Sachs to make money.
At the same time, Mai Jinheng also obtained the same document report.
The content is generally consistent with the documents in Belankfan's hands. The biggest difference is that the Morgan Stanley column has become Goldman Sachs.
"Goldman Sachs, an average price of US$198.87, shorting 12 million shares."
Seeing this, Mai Jinheng chuckled, not stupid. The financial giants in the United States are all here, so how could they be absent from Morgan.
I can only pretend to be deaf and dumb, after all, the business still has to be done.
——
"Give it."
Looking at the information handed over by Xu Liang, Helen took it curiously. "What is this?" "Finance report for the first phase of Facebook financial account." Helen's eyes lit up and she quickly turned up.
The Facebook financial account has always been controlled by Hongyan. Although she knows that she has made a lot of money, she is not sure how much she has.
"$5.53 billion?!" Helen said in surprise. "This is just the income from the first stage. If the follow-up goes well, the second stage will receive a generous return. Even if it cannot reach 10 billion after paying tax, there will be no big gap." Helen nodded vigorously. She never doubted the strength of her own man.
However, compared to the so-called second profit that was still planned, she was even more excited.
"Is this money after tax?" Xu Liang nodded.
Zhurong plans to invest in CDs bonds, many of which are invested in one year or more than two years, only 15% long-term capital gains tax is required.
In addition, the benefits distributed to insurance company executives.
Zhurong's actual funds to be put into the pocket are about 75% of the total income.
The returns in the United States will be slightly higher.
Xu Liang did not take any more tax avoidance measures. "This money is used to strengthen Facebook, especially to improve the dark fiber program and continue to promote the pan-entertainment program. If there is still the second phase of income, then donate to the Helen Xu Charity Foundation." "Donate?" "The second phase of investment lasts less than a year. Unless we are willing to pay a 35% short-term capital gains tax, donation is the best way to preserve funds." Xu Liang said.
Helen nodded subconsciously.
She also understands the financial system of the United States.
"This year's subprime mortgage crisis will have a great impact. We can use this donation to win the favor of the lower class and promote Facebook."
Seeing Helen, who quickly considered how to maximize its interests, Xu Liang felt a little relieved.
She is already a qualified professional manager.
"I will use the funds from the charity fund this time as an investment plan as a guarantee of our family's wealth in the United States."
Xu Liang briefly talked about his future plans for the charity fund.
Put charity funds into a vegetable basket, containing more than 20 high-value stocks, more than ten bonds with relatively stable returns, and some precious metal investments.
This can be regarded as an oversized mixed fund.
"In the future, the descendants of the family can join a charity fund, which pays high salaries to ensure their wealthy life every year, but shall not exceed one million US dollars.
At that time, all our houses will be donated to charitable funds, and the funds will be responsible for paying high property taxes, etc.
I think you know more about how to operate it in detail than me. "Xu Liang said.
Helen nodded. This is how the Montes Family Charity Fund operates. She knows very well what's going on.
"The charity fund provides the family with the bottom line. Facebook Group is a family business. If the family business fails, it will not affect the inheritance and wealth of the Xu family. "Xu Liang said.
"A perfect plan. "Xu Liang shook his head, "Whether it is perfect depends on the result. But we still have enough time to implement and change. ”
"Yes."
After chatting for a while, Helen looked at the time.
"I want to hold an online meeting with Netflix's senior management. Do you want to join us?"
"No, you can go and do it."
In fact, Xu Liang himself also wants to open it.
After seeing off Helen, Xu Liang came to the villa conference room.
The surrounding display screen shows the figures of Hongyan COO Xia Changsheng, Sun Zhenping, head of Hanhua Xiangjiang Office, and Qiu Heng, head of Hanhua Pacific Fund. "Mr. Xu." Seeing him come in, the three of them hurriedly greeted him.
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Xu Liang nodded and sat down in the middle.
He put the latest progress of Han Hua and Hongyan’s ‘Zhurong Plan’ in front of him.
Hold Lehman Brothers short positions of $3.325 billion, Bear Stearns $3.14 billion...
Hold Morgan Stanley $1.895 billion, Goldman Sachs $1.987 billion...
The five major banks, the five major investment banks, and one AIG American International Group hold a total of US$27.95 billion short positions of these 11 largest financial institutions in the United States.
If other listed financial institutions, insurance companies, real estate companies, etc. are included.
Hongyan holds a total of more than US$150 billion in short positions through its hundreds of shadow funds and institutions, accounting for half of Hongyan's total short positions globally.
The second is Japan, which has the second largest global GDP, accounting for more than 30 billion US dollars.
The rest is basically in Europe.
Asia outside South America and Japan accounted for more than $50 billion.
This does not include the mainland.
China now has no short selling mechanism, and even if there is one, Xu Liang will not do it.
Rabbits do not eat grass beside their nests.
Wand it casually outside, but you must keep the back path.
After reading for a while, Xu Liang put down the information.
"Today I gather you here to discuss the subsequent investment situation of the 'Zhurong Plan'....Sister Li, please briefly explain the current situation."
Li Jinling nodded, "At present, the exposure of Goldman Sachs and Morgan Stanley has been exposed a lot.
Morgan Stanley has suffered a lot of losses, Goldman Sachs' financial report is still profitable, and the stock price downside space should be very limited.
Lehman, Bear Stearns and Merrill Lynch have greater exposure than them.
Especially Lehman and Bear Stearns, according to our multiple data models, each of them has a loss of more than 20 billion US dollars. Without external capital support, bankruptcy is a high probability.
So, our next short selling focus should be Lehman, Bear Stearns and Merrill Lynch. "
After looking at the big boss and the expressions of everyone in the video, Li Jinling continued. "The first to expose the risks last year and this year was the investment bank. Once the impact of the subprime mortgage crisis continues to expand, the banking industry should take over the investment bank, so the banking industry is also the focus we need to pay attention to next. "
Xu Liang nodded slightly: "At present, we have invested nearly US$9 billion in 11 large financial institutions in the United States for short selling, and there are US$7.7 billion to short some regional banks and special financial institutions, such as Fannie Mae and Freddie Mae.
But...this is not enough.
Our capital volume is too large. Hongyan and Hanhua's short funds have a total amount of no less than US$500 billion under leverage. We need more investment channels and targets. "
Xia Changsheng said calmly: "Mr. Xu, in the current market, we cannot short too many stocks, otherwise it will cause violent fluctuations in the stock price, which will not only make the short-selling companies alert, but also easily affect the final short-selling profits.
However, Goldman Sachs and Morgan Stanley are helping us match some "put options" transactions recently.
I think we can try to short by buying a large number of put options later. ”
Xu Liang nodded slightly. The options here are different from those of startups and are circulated in the secondary market.
As a financial derivative instrument, options are divided into bell and bearish. At the same time, because they involve buyers and sellers, they are divided into four trading strategies:
Buy put options, which corresponds to the counterparty selling put options;
Buy call options, which corresponds to the counterparty selling call options. "Mr. Xu, recently Berkshire Hathaway is selling large numbers of bearish contracts on the S&P 500. Maybe we can take the opportunity to take it over." Sun Zhenping said.
Xu Liang's heart moved, "How long is the term?"
"Contracts ranging from 15 to 20 years."
Xu Liang frowned. The term was too long.
Apart from long-term funds such as pension and retirement funds, no institution will buy contracts that long time.
Sun Zhenping also knew that the deadline was a bit long, so he didn't speak anymore.
Qiu Heng smiled and said, "Most people think Buffett is a crowd of value investment, but they don't know that he is also a master of speculation, especially options." Xu Liang smiled.
To be honest, he also thought that this investment philosophy was the "value investment" that always was implemented. He knew that he had learned enough about entering the financial circle, and that he knew that this old guy was playing behind his back.
In April 1993, Coca-Cola's stock price hovered around $40, and Buffett sold 5 million put options that expired in December of that year and had an exercise price of $35.
In the end, Coca-Cola's stock price fluctuated around $40-45 all year round, and did not fall below $35 at the lowest.
So no one is willing to exercise put options and sell Coca-Cola shares to Buffett for $35.
The options were directly invalidated, and Buffett made the $7.5 million option fee income effortlessly.
There are many similar operations.
However, based on his understanding of Lao Ba, Buffett's main purpose of selling Coca-Cola should not be simply trying to earn an option fee, but rather thinking that Coca-Cola's stock price is a bit expensive and wants to buy it at a psychologically expected price of $35.
Although I didn't buy it in the end, I also received an option fee as a comfort.
The risk point of the whole transaction is that if Coca-Cola's stock price falls below $35, such as $25, the opponent will definitely exercise the right at this time. Buffett can only cry and eat 5 million shares at a price of $10 higher than the market price, that is, the option agreed to take out 5 million shares, and directly lose 50 million US dollars.
The 7.5 million US dollars of option fees do not need to be refunded, and they can offset the losses slightly, but they also lost more than 40 million US dollars.
However, it is obvious that Buffett is very confident in Coca-Cola's stock price judgment and is optimistic about its later stock price trend, so he dares to sell put options.
Similarly, institutions that dare to sell put options in financial institutions such as Lehman Brothers and Bear Stearns are definitely a manifestation of confidence in these companies.
But the current major investment banks are not having a good life, and I am afraid they can't find such a silly man who is a rival.
Xu Liang expressed his thoughts.
Sun Zhenping said: "The reason is that, but we can set the option strike price a little lower.
For example, Goldman Sachs, the current stock price of this company is nearly $200. Although they have a bad reputation and even have voices saying they want to investigate and prosecute, their financial situation is good and they are the best fundamentals among the five major investment banks.
How about you say we set the option strike price to $100?
Can you attract a group of counterparties to sell some of our put options?
If the option fee is US$20, this part of the cost must be taken into account.
In other words, Goldman Sachs' stock price will fall below $80 before we can make profits.
Compared with Goldman Sachs' current stock price, we must reach a 60% drop before we can win.
Is this attractive enough?
In the eyes of most people, they should be more likely to win. ”
Xia Changsheng said: "Will it be too risky to do this?"
"The risk is a bit large, but if the subprime mortgage crisis breaks out as expected, the probability of us winning is more than 70%.
And I'm just giving an example, don't take it seriously.
When it comes to derivative pricing, it must be calculated through various formulas." Sun Zhenping said.
Xu Liang thought carefully, in fact, this is also a kind of gambling, betting on stock price expectations.
Whoever has a better vision and is more accurate will be the winner.
And if you play options, you can make more money than just shorting the underlying stocks.
But the risk is very high. Ninety percent of buying put options is a gift. To put it bluntly, it is speculation, just like buying a lottery.
However, there are no exceptions. In the face of a subprime mortgage crisis, many counterparties' formulas, calculations, analysis... will all fail. "You can try it with some funds, but the final plan must be shown first."
Xu Liang was not sure about making a profit through put options, because if he wanted to succeed, he would need to judge the time and strike price and other conditions.
The most important thing is that I haven't played it before and I feel unsure.
But he still remembers the time when Lehman Brothers collapsed, and he also remembers that the stock price of several stocks fell to $1.
So as a supplement to the equity market, it should be enough.
The key is whether anyone is willing to play against him.
(This chapter ends)