I Became the Youngest Daughter of a Chaebol Family-Chapter 13: Earning Allowance (3)

Striking it big in today’s financial world is no easy feat.

The blossoming of financial engineering—the real golden age—is still at least ten years away. The peak of the bubble? That won’t come until around 2007.

But once in a while, an opportunity like this comes along.

“This is... isn’t this a bit too much?”

That’s what Executive Director Ha Joo-seong said. And honestly, it was fair.

For one, trading options the day before expiration is already something no beginner should be doing. Barrier options? Even more so.

If the exchange rate doesn’t drop to 215 yen per dollar, the option I bought will become literal trash under the terms of the contract.

And here’s an even bigger issue—

By expiration, an option’s value erodes exponentially due to time decay. If my prediction is off, I’ll lose everything I spent on the option premium.

“I mean... a 10% drop in the yen in a single day is...”

He was clearly unsettled, but I was certain.

I had that unwavering certainty that comes from having witnessed it firsthand in a past life.

“But that’s why the premium is so low, right?”

Ha Joo-seong muttered in disbelief.

“Well, of course... The extrinsic value practically drops to zero...”

An option’s value has two components: intrinsic value and extrinsic value.

Intrinsic value is the direct value of the option itself. If the strike price on the contract differs favorably from the market price, that gap is what gives the option its intrinsic value.

A simple example—if you have a discount coupon that lets you buy a 300,000-won laptop for 250,000 won, that coupon has an intrinsic value of 50,000 won.

Extrinsic value, on the other hand, is time value. In finance, time is everything—and here, time value reflects volatility. Since the world can change overnight, all options contain some measure of time value.

Naturally, the closer you get to expiration, the more that time value fades.

At expiration, extrinsic value is exactly zero.

“Wouldn’t it be better to just buy vanilla options instead of a barrier one? If you bought a dollar put and a yen call together, the volatility would give you some decent leverage...”

As he wiped the cold sweat from his forehead, I gave a soft smile and shook my head.

“No. It’s fine. Just go with the barrier option. Everyone already knows the yen’s going to rise, more or less. To make more, I need to go even more extreme. Just match the barrier on that side, and pick a strike price that’s reasonably close.”

With a standard position, even a small rise in the yen would yield a profit.

In other words, such options would still retain some value right up to expiration.

But the one I’m buying is different. Unless the yen rises dramatically—nearly 10% overnight—it becomes worthless.

Let’s say the rate hits 216 yen per dollar. The people who bought cheap 220-yen call options would be cheering.

But because my barrier is set at 215, I wouldn’t even be able to exercise the option.

Even if I had a ridiculous contract like one set at 300 yen per dollar, I’d still get nothing under the terms of the barrier.

In short—

I’m buying an option that, by expiration, has almost no value. Dirt cheap.

All on the belief that tomorrow, the exchange rate will shift by 10%.

“That’s the bet I’m placing. If I’m right, I’ll make money.”

At my words, Executive Director Ha Joo-seong let out a deep sigh and relented.

“Understood. Whew... If it’s you saying so, I’ll trust it. I’ll search for the best strike prices I can find.”

“Good. For now, just like you said, buy some dollar puts too—just in case. And if we have no other options left, we’ll consider other things. Like binary options or whatever.”

His jaw dropped slightly in awe.

“...So vanilla options aren’t even on the table?”

“If you’re certain about the future, there’s no need for them.”

There are things that rarely—almost never—happen in the real world.

Like the exchange rate suddenly shifting by 10% in one day, or some lunatic terrorists ramming planes into the World Trade Center.

Those are what we call Black Swans.

And I know of dozens, no—hundreds—of Black Swans that will occur over the next few decades. If I still can’t make money off that, I might as well give up.

“Seriously. You’re something else. You really remind me of the old chairman.”

“My grandfather?”

Yoo Seong-pil probably hated the securities world, didn’t he?

“I mean that insane level of self-confidence. Like the world is wrong and you’re right—and you’re willing to force the world to prove it, no matter what... That kind of personality.”

“Oh. If that’s what you mean... hmm. I guess that’s fair.”

I gave a vague nod.

I’m well aware I probably come off as arrogant. And I have no real intention of fixing that, either.

Still... it’s a little unfair.

“But I’m not like him. It’s not that I think I’m right—I am right.”

Ha Joo-seong looked like he had a lot to say about that, but he didn’t respond. Instead, he quietly walked me out.

...Well, he didn’t argue. So that must mean he agrees.

***

She’s... extraordinary.

That was Ha Joo-seong’s evaluation of Yoo Ha-yeon, Executive Director of Daehwa Securities.

‘One way or another, she’s not a normal person.’

How many people in this world would gamble like that, just because they have a powerful backer who can afford to fail?

Plenty of kids do reckless things when they’re young. They don’t know any better. When a child’s wild imagination happens to collide with luck, the result can look insane.

But... this was different.

She had made a cold, rational calculation—and then surrendered herself to madness. Believing that madness was her best path forward.

She was the embodiment of self-assurance. Childlike in age, but utterly egoistic in nature.

Ha Joo-seong rated her unshakable confidence even more highly than her innate talent. After all, even among geniuses, only a few make history—and they’re almost always the type with that kind of conviction.

And... the fact that she’d easily sidestepped a mistake he once made himself—without breaking a sweat—left him utterly captivated.

“...I’d better start making some calls.”

He opened his notebook and began writing down names of people who might be holding the kind of options Yoo Ha-yeon wanted.

At # Nоvеlight # the very bottom, he crossed one out, then picked up his old-fashioned rotary phone—the one he only used for important business.

Click.

“Ahaha, calling because I wanna buy some options. Huh? What kind? Come on, you already know. If it weren’t OTC, I wouldn’t be bothering, would I?”

Click.

“Hey, Sasao. Didn’t your firm have some options set aside for hedging? Think you could spare a few of those?”

Click.

Click.

Click.

This translation is the intellectual property of Novelight.

The phone kept going up and down, the dial spinning non-stop, punching out numbers. One by one, the names in Ha Joo-seong’s notebook were crossed out—until finally, only one remained.

Stanley Miller.

One of Wall Street’s promising fund managers. Ha Joo-seong had some distant connections to him back from his own trading days.

With his aggressive investment style... he’d probably have the kind of option the young miss was asking for.

Click.

Ha Joo-seong turned the dial and called him.

“Ah, Mr. Miller. I was wondering if you’d be open to trading some forex options. A dollar/yen call option with a 215 barrier. I heard someone’s looking to buy a small amount for hedging. The expiration would be September 23rd.”

[...Are you insane? You’re actually looking to buy that thing?]

A perfectly reasonable response. Ha Joo-seong chuckled lightly and brushed it off.

“Not buying right this minute. And it’s only... a very small quantity. Strictly as a hedge, you see.”

[Hmm, yeah, I’ve heard some chatter. Something about them adjusting the dollar value that day... But if you’re serious, that implies at least a 10% swing, doesn’t it?]

“That’s exactly why it’s being considered. The person interested is extremely cautious—it seems they’re accounting for even the slimmest possibility.”

[Cautious? What kind of ‘cautious’ person buys barrier options?]

Miller burst into incredulous laughter, and Ha Joo-seong, inwardly, couldn’t help but agree.

Seriously—who the hell throws all their cash into a barrier option for speculation? Miller was probably imagining that the buyer was some Japanese ultra-wealthy investor with millions in assets.

And for someone like that, having a few extreme options as a hedge against a sharp yen surge wouldn’t be strange at all.

“We’re thinking of a trade around... fifty thousand dollars.”

That finally got a more open response.

[Fifty grand? Ah, that’s not bad. Reasonable. Sounds like a real hedge then. Sure. Want me to fax the contract now?]

Now came the tricky part.

Though he was inwardly tense, Ha Joo-seong kept his tone cool and casual.

“No rush for the transaction itself. I just wanted to reach out in advance. I thought it only polite to give you a heads-up on this kind of matter.”

[...]

There was a brief silence on the other end.

[When, exactly? What’s the planned trading date?]

“They’re aiming for around September 20th—”

The sourc𝗲 of this content is freēwēbηovel.c૦m.

Before he could even finish the sentence, a curse flew from the receiver.

[Are you out of your mind? You think I’m going to hold that thing until expiration?!]

“You are going to hold it... aren’t you?”

Generally speaking, option prices decay completely by expiration due to time value erosion. Most people try to sell before then.

But the meaning behind the option Ha Joo-seong wanted was unmistakable: it was a bet that volatility at the finance ministers’ meeting would pay off.

Which meant that even near expiration, volatility would still be high—and therefore, it would still make sense to hold the option.

Miller was one of those people.

[...Goddamn it. You’re right. I was hoping to hit it big with it, and now you’re calling about this? Is that why you reached out, Joo-seong?]

“I simply thought you’d like to have one more option on the table. As you know, there aren’t many people willing to take that kind of position right before expiration.”

Miller responded with a bitter mix of annoyance and amusement.

[Yeah! And that’s why I’m still on this damn call! This is a devil’s bargain—you’re throwing chicken at me now?]

Ha Joo-seong’s offer was crystal clear: we’ll buy that barrier option right before expiration. That’s it.

But given the nature of the option—and Miller’s current position—that offer carried a specific subtext.

I’m betting the dollar will fall to 215 yen. And I know that you’re also betting on it. I also know you’re nervous about it.

So in other words...

If you’re scared, cash out now for a little money and sell it.