Chapter 12: Earning Pocket Money (1)

After starting elementary school, I spent money lavishly and had fun.

Hmm.

To be honest, you could say I’m starting to enjoy spending money.

Anticipating the film industry’s growth after democratization, I invested in film companies and showered money on promising scholars.

Even high-nosed professors, who would never meet a child just asking, would bow if offered research funding.

A few professors from my past life were graduate students now; the encounters were quite something. I almost slipped and used honorifics.

Honestly, I wanted to use some of it as political funds in Donggyo dong and Sangdo dong, but that was too risky. The New Military Group was still firmly in power.

Anyway, the result was…

“…I’m out of money.”

That’s right.

I’m broke.

Well, roughly 100 million won in cash remains.

***

It’s not like I’ve lost all my money. Most of my assets are in stocks.

“…Then isn’t that fine? The Chairman will give you plenty of allowance anyway.”

Lee Sihyeon stood there blankly, offering this pathetic assessment. She still lacks a grasp of finances.

100 million won is pocket change.

“Haa, should I ask grandpa for more? I need to manage my own affairs. And he’d be disappointed.”

More critically, there’s something even more important.

My myth is crumbling.

“I told you, making money is easy. Incredibly easy. What I’m creating is my story. Like grandpa’s founding myth—a captivating legend.”

That’s something money can’t buy. It will become my life’s trajectory, directly contributing to my power.

Just as anyone hearing Yu Seongpil’s name thinks of great wealth, one day, upon hearing Yu Hayeon, people will recall the greatest success story of the 21st century.

“Despite all that, you’re a bit short on cash right now.”

Lee Sihyeon grumbled softly, presenting my snack: a delicious chocolate cake and warm milk. Not mass-produced, but made by a top pastry chef.

“Hmm. Delicious. Sweet and delightful.”

Grateful for my miraculous metabolism, I savor the sweetness. Is this the taste of power…?

“Th-this cake, and most things are bought with your money, right? Honestly, the Chairman wouldn’t mind you using his money…”

I smiled faintly.

“No. I need to use my own money. It gives me control. And once I make some money, I’ll become independent. I need my own house.”

Grandpa’s house is nice, but I want my own space.

“A house? Why leave this place… No, more importantly, are you finally going to earn money?”

Lee Sihyeon’s eyes lit up. I’ve only talked about how easy it is to make money and spent it; I haven’t actually shown her how I do it.

It was partly intentional. It makes the story more dramatic. My casual conversation style recently stems from this as well.

It’s much more interesting this way, isn’t it?

And… now is the real start. It’s probably the story that would appear around the first 30 pages of a 300-page biography of Yu Hayeon. Exactly.

“Yeah. It’s August, time to move. The exchange rate will fluctuate wildly soon.”

The Plaza Accord is next month.

The yen dollar exchange rate will completely reverse.

“The exchange rate is changing?”

Lee Sihyeon questioned me, puzzled, after my explanation.

“I, I understand roughly, but how do you make money?”

With a bright smile, I ask back.

“You figure it out. It’s time you learned to think for yourself, right?”

“Hearing that from an eight-year-old is refreshing… Hmm. We exchange dollars for yen beforehand, right? As you said, we would at least double our money, right?”

That’s correct. The yen will double from 250 to 120 yen per dollar; we can easily double our money just from the exchange rate difference.

“But that only doubles it. Can’t we make even more money insanely? You know, opportunities like this are rare.”

Such drastic exchange rate shifts are uncommon. And, since it’s decided arbitrarily by bureaucrats, it’s not even affected by the market!

I know exactly when the exchange rate will flip. Without the butterfly effect.

“Um… I don’t know, but when the rate changes, some companies will fail and others will thrive. Wasn’t that the purpose of the exchange rate change anyway? To curb companies. Investing in companies might be good.”

I nod.

“Hmm. Roughly 70 points?”

That’s close.

“What’s the perfect score?”

“150 points.”

“Ambiguous.”

Lee Sihyeon, briefly pleased, now looks uncertain. She got it partially right, but feels teased.

And she’s right to feel that way.

“Do you understand the word ‘future’? Not the gift, but future.”

“……I’m not sure. Future… is the future, right?”

“Then what about options?”

“Ah, I think I have a sense of this…”

Perhaps due to the word itself, Lee Sihyeon ponders, clutching her head. It doesn’t last long, I stopped her.

“No. You don’t know. Even in the securities world, few people know this right now.”

“…Then why did you ask?”

“To see your reaction.”

I laugh playfully, beginning my explanation.

“There’s something called derivatives. Created by some amazing adults who want to put a price on everything in the world and trade it…”

“…Scum.”

“Regardless of who they are, judging by your assessment, Miss, they’d be considered very bad people.”

“Probably started with good intentions, like the inventor of the machine gun.”

The 1980s saw the rise of derivatives. Now, it’s nearly impossible for individual investors, but my connections make it possible.

I haven’t been idle.

“These derivatives are linked to underlying assets, their price determined by it. Futures, options, swaps are the main ones.”

Sihyeon’s eyes already glaze over slightly.

“…Um, first, what’s the underlying asset?”

“Almost anything of value? Usually stocks, but in this case, it’s the exchange rate, and we’ll use options. Forget futures and swaps for now.”

Lee Sihyeon, her thirst for knowledge rekindled, nods enthusiastically. She could make money from this too.

“Options, simply put, are buying and selling rights.”

“Rights?”

“Yeah. The underlying asset—from now on, we’ll call it foreign exchange—the right to buy or sell this foreign exchange at a specific price at a specific time. This is called a foreign exchange option.”

After a moment of thought, Sihyeon nods. She possesses a brilliant mind, as expected of a prestigious university student.

“So… it’s trading in advance. You don’t know what will happen in the future, but you trade based on a predicted price. The volatility is naturally high… and if you’re right, you make a fortune.”

I smile, confirming her assessment.

“Right. There are subtle differences, but since I haven’t explained them, that’s almost a perfect score.”

“…Wait. Isn’t this a futures contract? Trading beforehand, a forward contract. The words are almost identical.”

Hmm, I found a good secretary. Or, the Chief Secretary found a good one?

With such a perceptive and quick audience, my excitement grows, and I clap my hands.

“Right. Options are rights. Futures, as you said, are trades in advance. It’s a contract, so you must exercise it at maturity. But… you don’t have to exercise options if you don’t want to. You can just give up the right.”

Let’s say I buy an option to exchange 200 yen for 1 dollar.

At maturity, 1 dollar is worth 100 yen. I profit.

But conversely, if I buy an option to get 50 yen for 1 dollar, I lose. The market offers 100 yen, why would I accept 50?

That’s why options are sometimes abandoned.

Wait. Then isn’t this a guaranteed loss for the option seller? A guaranteed loss if they lose, and if the buyer gives up when they’d profit… Ah.”

Sihyeon bows her head, having seemingly just realized something.

“The option itself has a price.”

Correct. That’s called a premium.

“Originally… derivatives were created to reduce risk. By buying and selling risk, we hedge the risk of the underlying asset. Therefore, options have a price.”

“It sounds similar to insurance.”

“Yeah. Insurance is actually a type of options contract.”

Those unwilling to bear risk pay to shift that risk. And those assuming the risk receive compensation for potentially bearing that risk.

In other words.

Options, and derivatives in general, are fundamentally bundles of risk.

I set down my nearly full glass of milk.

“If this is the underlying asset…” I gesture to the milk in the glass.

Then I tilt the glass, pouring the milk into a smaller dish. The milk spills, a more chaotic, violent movement.

“This is a derivative.”

Underlying assets are like measuring the depth of a calm river. Derivatives are like betting on the height of waves in a storm.

Much riskier, unpredictable, more volatile…

But, the potential returns are far greater.

And I know the future.