New York Manhattan, Friday Ten o'clock in the morning.
Atlantic Ocean The cold air blowing through the gaps in the high-rise buildings suppressed the clouds outside the window.
Inside the hotel Suite, the atmosphere is cold and efficient.
Su Wantang was wearing a simple and smart gray cashmere sweater, holding freshly washed berries in his hand and placing them on the side of the coffee table.
She sat next to Shen Zhiyi, raised her hand to straighten Shen Zhiyi's slightly messy hair, and spoke in a gentle tone:
"Zhiyi, drink some hot oat milk, don't just check the traces, you haven't even had a few bites of breakfast."
"Thank you Sister Wantang."
Shen Zhiyi smiled, rubbed Su Wantang's shoulder, and then pushed a newly printed compliance risk list in front of Zhao Chen.
"Look, this is a risk isolation plan for SLV Options.
Although we only used the principal of Over Eighty Million US Dollars, we enlarged the leverage on the extreme Out-of-the-Money Options.
When liquidity is at its peak, the nominal position (Notional Value) will be extremely large.
I asked Lawyer Lin to dismantle six independent SPVs in Cayman Islands and British Virgin Islands.
Ensure that the CFTC's Speculative Position Limits is not triggered on any single account."
Zhao Chen put his arm around Shen Zhiyi's waist and kissed her gently on the forehead, his tone of voice a bit doting and approving:
"With you and Wantang watching behind me, I dare not leave a way out when I open a gap in front."
Su Wantang looked at the two of them with a smile, handed Zhao Chen a strawberry, and joked:
"Don't talk too much. Xi Xi has been waiting for the video for a long time. Come and listen to Henglong Research Institute's latest Model deduction."
On the iPad screen on the desk, Chen Xi adjusted the lens. The huge electronic whiteboard behind him was filled with dense data charts and Cash-and-Carry Arbitrage Model.
"Zhao Zong, Sister Shen, Wantang."
Chen Xi's expression is particularly solemn,
"After receiving the instruction just given by Zhao Zong, Research Institute's commodity team and I immediately called the underlying databases of Bloomberg and Refinitiv (Refinitiv).
An in-depth dismantling of the Supply Chain and storage capacity structure of the global Silver was conducted.
The result was heavier than we expected - the so-called 'Short Squeeze war' among retail investors,
It was a castle in the air built from day one on a naive vision of commodity markets."
"Tell me about it, tear it apart and listen to the truth."
Zhao Chen leaned on the back of the chair and tapped his fingertips lightly on the table.
"The first is the dimensionality reduction attack on physical storage capacity and delivery rules."
Chen Xi picked up Laser Pointer and pointed to the first bar chart on the whiteboard:
"Retail investors think they can drive institutions to death by shouting slogans on Reddit and snatching up all the silver bars in the hands of retail dealers.
But in fact, the real big players in the global Silver market are London Bullion Market Association (LBMA) and New York Commodity Exchange (COMEX).
As of last week, more than 10,800 tons of physical Silver were stored in the LBMA's underground warehouse alone, and there were nearly 400 million Ounce in COMEX warehouse receipts."
Chen Xi paused for a moment, with cold rationality in his eyes:
"The investment silver bars and coins snapped up by retail investors only account for less than 15% of global Silver annual consumption.
Even if retail investors across the United States buy up silver bars from retailers, it will only be a drop in the bucket for the delivery vaults of the LBMA and COMEX.
What's even more fatal is that the prospectus of SLV (Silver ETF) has extremely strict redemption terms--
Only institutional excess participants (Authorized Participants, referred to as AP) who hold at least 500,000 shares of SLV are eligible to apply to the trust to withdraw physical Silver.
Ordinary retail investors hold hundreds of shares of SLV and want to withdraw cash for delivery? There is no way!"
"This is the cruelty of information asymmetry."
Shen Zhiyi opened the legal terms and added,
"In SLV's AP list, the top three are JPMorgan Chase, Citigroup and Morgan Stanley.
When retail investors buy SLV, they are essentially sending cash flow to these Market Maker giants."
"The second and most fatal point - Cash-and-Carry Arbitrage of Market Maker and 'Paper Silver' Hedging Mechanism."
Chen Xi Draw a complex closed-loop network on the whiteboard:
"Market Maker has almost unlimited hedging tools at his disposal.
When retail investors rushed in to buy SLV Call Options (Call), they sold Market Maker of Options in order to keep Delta-Neutral,
It is indeed necessary to buy Silver in the futures market or Spot market for hedging.
But this does not mean that Market Maker will be liquidated!
Because giants such as JPMorgan Chase hold extremely large OTC Derivatives quotas and Spot Short Sellers positions."
"They even hope that silver prices will be driven up by retail investors in the short term."
Zhao Chen took over the conversation with a cold tone,
"Because the higher the silver price rises, the more expensive the Options Premium (Premium) Market Maker sold at the historical high.
Once the sentiment reaches its peak and the price of silver plummets, all those Out-of-the-Money Options will turn into waste paper, and Market Maker will be able to eat up every penny of the principal invested by retail investors without any damage."
"Exactly, Zhao Zong."
Chen Xi nodded and sighed at the other end of the video,
"Silver has an annual transaction volume of hundreds of billions US Dollar, and it has an extremely complete Cash-and-Carry Arbitrage mechanism.
The reason why GME can be Short Squeeze is because GME Common Stock is 140% locked up by institutions Short Selling, and Circulating Supply is locked up by retail investors and Ryan Cohen;
The supply of Silver is nearly unlimited in the short term--
As long as the price is high enough, scrap silver recycling, mining hedging, and even Market Maker's vault warehouse receipts will flood into the market like a tide, instantly submerging retail investors' Buying Pressure."
After listening to Chen Xi's report, Su Wantang sighed softly, with a hint of complexity in his beautiful eyes:
"In other words, those young retail investors on WallStreetBets Forum who are waving their money and think they are breaking the monopoly of Wall Street,
Did you step into a devouring trap carefully designed by the organization from the beginning?"
"The capital market never believes in tears, Wantang."
Zhao Chen stood up, walked behind Su Wantang, and gently touched her shoulders with both hands.
"The Euphoria of retail investors is true, but their ignorance is also true.
The Wall Street giants are now sitting on the top floors of high-rise buildings, drinking Champagne, while watching this group of Euphoria retail investors throwing stones into the trillion-level waves."
Zhao Chen turned his attention back to the steeply rising SLV pre-market trend chart on the big screen, and his eyes suddenly became extremely deep and sharp:
"But we are different. We do not act as Market Maker's accomplices to maliciously destroy the market, nor do we act as the savior of retail investors to persuade them to be rational.
When this huge force of Euphoria rushes towards the cliff, it will smash a brief window of fluid premium in the air.
Forty-eight hours, only forty-eight hours, we will tear a piece of flesh out of this dead situation."
Chen Xi straightened up in the video:
"Zhao Zong, Research Institute's liquidity monitoring Model has all been online,
Monitor the premium rate changes of COMEX Silver Futures and SLV Options 24 hours a day."
"Okay." Zhao Chen gave the order in a deep voice,
"Chen Xi, send hedging data to New York at any time;
Zhiyi, keep a close eye on the fund transfers and compliance traces of six SPVs;
Wantang, help me get a distribution map of Europe LME and Shanghai Futures Exchange Pure Nickel Spot warehouse receipts."
Zhao Chen leaned down and whispered in Su Wantang's ear, with a mysterious and confident arc at the corner of his mouth:
"Silver is the bait that Wall Street put on the table, and we are going to use the chips obtained in these forty-eight hours to overturn another gambling table a year later."