Opening a long position, or "going long," essentially meant betting that the price of an item would rise. It involved buying it first using a margin deposit, with the intention of selling it later when the price increased.
By only putting down a small percentage as margin, he naturally didn't have to pay the full amount, which Zhang Yang figured was the best way to legitimately leverage his funds right now.
However, this was all information he had picked up from listening to his patients; he had never actually executed such a trade himself. This was his first time.
The staff member didn't react immediately. Zhang Yang glanced up at the large screen; in that brief moment, the price of Sanqi had dipped slightly again, but this only made him more anxious.
“Can’t I open a long position?”
Zhang Yang asked, frowning. He had actually been observing here for the past few days, learning the rules. Opening long positions was permitted; medicinal herbs were traded as futures—otherwise, what would be the purpose of this trading center?
“Yes, yes, of course. Just a moment, let me check!”
The staff member quickly nodded and began typing on her computer. While personal computers weren't completely ubiquitous in '98, many sectors, especially securities and futures markets, had already fully adopted them.
“Twenty tou of Sanqi, margin requirement 20%, you can open a long position!”
After a short while, the staff member looked up and stated quietly.
As she spoke, she kept sizing up Zhang Yang. Everyone knew that Sanqi prices had been falling these past two days, and quite steeply at that. There were even rumors that massive shipments of Sanqi were arriving from Yunnan, suggesting prices would drop even further. To see someone buying a long position on Sanqi now was astonishing.
“That’s good. Fifty thousand per lot, twenty tou of Sanqi, let’s take two lots first!”
Zhang Yang nodded. As long as he could open the position, two lots at fifty thousand each for a long position meant a margin deposit of only twenty thousand, yet it allowed him to control a value of one hundred thousand in goods. That was a very good deal.
As for the risk of further decline causing losses, he hadn't even considered it.
“Two lots, fifty thousand, long position. Please wait!”
The staff member immediately nodded. This was her job. While large trades involving millions were common here, few were initiated by someone so young placing such a large margin position.
Once the margin for the two lots at fifty thousand went through, the price of the twenty tou Sanqi stabilized slightly but did not rise.
Seeing the change on the large screen, Zhang Yang breathed a silent sigh of relief. The price hadn't moved up; the major players hadn't made their move yet. He still had time to act.
“Thirty tou of Sanqi, long position, fifty thousand per lot, let’s take two lots of that as well!”
Zhang Yang didn't move from his spot and spoke again. He had many deposit receipts—over two hundred thousand. He had only spent twenty thousand just now and could afford to continue trading.
“Ah!”
The staff member looked up, staring at him in shock. After a brief moment of stupefaction, she snapped back to action and immediately began processing the order for Zhang Yang.
With Sanqi having fallen so low, someone was still aggressively buying long positions. She felt this man was either insane or had too much money to spend.
Conventionally, once a futures contract had been manipulated by big players, it wouldn't rise in the short term, or it would remain in a slump for a long time. At such a juncture, nobody was willing to touch it.
Opening a long position wasn't just about depositing the margin. Once a long position was opened, even if the goods weren't physically in your hands, they were under your name, and associated fees like storage couldn't be waived. Furthermore, if you couldn't sell when the time came, you couldn't take delivery either, leaving only the option to liquidate the position.
Liquidating meant that all those margin deposit slips you held would become worthless paper, resulting in a total loss of capital.
Since the price of Sanqi was currently low, most people didn't expect it to rise in the short term, so the margin requirement for the thirty tou Sanqi remained at 20%.
Four lots in total, fifty thousand per lot. Zhang Yang had effectively bought two hundred thousand worth of Sanqi, but he had only paid out forty thousand in capital.
He looked up at the large screen, and Zhang Yang’s expression shifted slightly.
The price of the twenty tou Sanqi had changed since just a moment ago. Zhang Yang’s two lots at fifty thousand had caused no reaction, but now it had ticked up by over ten cents.
This indicated that someone else had begun to intervene, and with substantial capital—definitely more than his own.
“Twenty tou of Sanqi, fifty thousand per lot, four lots, quickly!”
Zhang Yang immediately turned and instructed. The staff member hesitated slightly, glanced at the deposit receipts in Zhang Yang’s hand, and despite her confusion, processed the order for him.
After these four lots went through, the price of Sanqi shifted again. This time, the increase was already over twenty cents higher than before.
“Twenty tou of Sanqi, fifty thousand per lot, eight lots! And for the thirty tou of Sanqi, also fifty thousand per lot, eight lots!”
Zhang Yang turned back again. He knew his own funds couldn't cause such a dramatic fluctuation; at most, it would cause a small uptick. Such a significant change proved that other capital was indeed entering the market right at this moment, and it was entering rapidly.
For Zhang Yang, this was the moment to buy the dip, and naturally, he was tense.
Two sets of eight lots, fifty thousand per lot—that amounted to eight million. The staff member had handled million-dollar trades before, but never so many massive, open-ended positions.
With eight million committed, both the twenty tou and thirty tou Sanqi began to rise quickly. This surge finally caught the attention of some people nearby.
However, most people were merely watching or murmuring; no one was actually taking action.
The wild swings in Sanqi prices over the last two days had made everyone cautious, afraid to make a rash move.
An hour later, Zhang Yang sat down comfortably in the lounge area of the hall, clutching a stack of margin transaction forms. Meanwhile, the discussions among the other patrons in the hall grew louder and more numerous.
The continuous decline of Sanqi had suddenly reversed today. Within the first hour of trading, it had already hit its daily upper limit. Many people couldn't comprehend this turn of events and found it baffling.
Only Zhang Yang knew for certain: the major players had stepped in, and he had chosen the perfect moment.
Once the major players entered, they wouldn't stop until their objective was achieved. The true frenzy for Sanqi was about to begin.
Before eleven o’clock, Su Zhantao and Wu Sheng returned. There was no joy on their faces; instead, they looked somewhat dejected.
“Zhang Yang, we’re back. We couldn't secure fifty thousand worth of goods; we only managed to get twenty thousand?”
Su Zhantao spoke to Zhang Yang before even sitting down, his voice listless.
Initially, they had approached collecting spot purchases of Sanqi with a relaxed attitude. Since the price had been dropping for two days, they assumed there would be plenty available for anyone willing to buy, and they could get whatever they wanted.
But reality proved otherwise. As they were collecting spot goods, a large group of people suddenly appeared, also buying, and they were offering higher prices than Su Zhantao and Wu Sheng were willing to pay.
This group bought indiscriminately regardless of the price, causing the market price for Sanqi to surge. The spot market, unlike the regulated trading hall, had no upper or lower price limit. If someone was buying, someone was selling. Many sellers lately had been anxious about offloading their stock, and when buyers appeared, they released large quantities onto the market.
“I understand. Sit down and rest for a bit!”
Zhang Yang smiled and shook his head. Su Zhantao looked even more discouraged. “You don't know, the price of Sanqi outside has started rising again! Damn it, it’s so bizarre. One moment it drops, the next it shoots up. It’s already in the mid-twenties now!”
He found the fluctuations of the external Sanqi market incomprehensible. Although he had been trading for a year and knew many traditional Chinese medicine prices were volatile, he had never experienced such dramatic swings.
It was Wu Sheng, being the veteran here, who sensed something was amiss. Such large-scale fluctuations were unprecedented, though he couldn't pinpoint why. He already suspected that the earlier rumor—that the price drop was caused by major players offloading stock—was incorrect.
Despite his experience, he only had a vague feeling; he didn't grasp the specific mechanism behind this sudden reversal.
“Twenty thousand is fine, don’t worry. With what you have, we definitely won’t lose money on this venture!”
Zhang Yang patted the bag on his body and said cheerfully. Su Zhantao’s eyes lit up slightly, and he immediately took the bag from Zhang Yang’s hand.
“Long positions? All long positions?”
After only two glances, Su Zhantao cried out in shock, though he managed to keep his voice subdued enough not to cause a scene.
Su Zhantao might be young, but he had been in this business for at least a year and understood what long positions meant. This was betting on a rise; only those with immense courage would dare do this.
Wu Sheng was also stunned. So many positions, all going long—this meant Zhang Yang had absolute confidence that the price would rise. If it didn't rise, or if it dropped, they would face a total wipeout.
Collecting spot goods from outside meant that even if the price fell, they could at least sell some stock. Here, if the price dropped past a certain point, their positions would be forcibly liquidated, leaving them with nothing.
This kind of risk was far greater than dealing in the external market.
“That’s right. Let’s go. Bring your money tomorrow and keep collecting. Once we have everything secured, we can wait for the final harvest!”
Zhang Yang chuckled, feeling excellent.
He had committed all his capital today to long positions—two million seven hundred thousand—effectively buying over ten million worth of Sanqi. The current rise in Sanqi prices today was partly fueled by his maneuvering behind the scenes; ten million was enough to influence the price of an item here, though not enough to hit the upper limit.
Having completed these transactions, Zhang Yang finally relaxed. He was fortunate to have acted quickly and entered early; looking at the speed of the upward trend, any hesitation might have prevented him from getting in at all.
Being late would have meant a direct loss of money for Zhang Yang.
Now, everything that needed to be done was done. The final results depended entirely on whether future developments matched his memories from his previous life.
The two million in margin deposits made Su Zhantao anxious and uncertain. He thought he had been aggressive enough this time, but Zhang Yang was playing an even bigger game, far exceeding his expectations.
Before this, Zhang Yang hadn't even told him about going long, or Su Zhantao might not have had the composure to run out and collect spot goods.
If this venture truly made money as Zhang Yang claimed, the profits this time wouldn't just be marginal. He couldn't even imagine how much they might earn.
Around noon, the group returned to the hotel. Zhang Yang didn't go out in the afternoon; instead, he focused on filling in the latest price chart pinned to the wall. The prices were what he remembered most vividly from his past life, and he would use this chart to select the most opportune moment to sell.
Maximizing profit wasn't just a concept understood by merchants; Zhang Yang, the doctor, understood it too.
First chapter release. Asking for monthly votes! Xiao Yu has no backlog of chapters; I updated seven chapters yesterday, going to sleep late into the night. I truly did my best, and my wrist still aches even now.