Chapter 16: Plaza Accord (1)

September 19, 1985.

After school, I immediately rushed to Daeha Securities.

I wanted to skip school for a week and clear my schedule, but that was impossible because my grandfather wouldn’t allow it.

I could occasionally skip a single important day, but I should generally go to school.

-Click.

Lee Sihyeon opened the door for me, revealing a kind-looking man struggling with documents.

Ha Jusung, the executive director of Daeha Securities. He smiled slightly, bowing his head.

“Miss, you’ve arrived.”

“Yes, I’m here.”

I picked up a scribbled piece of paper and glanced at it. It was a formula for calculating option prices.

“This is a down-and-in call option, right?”

A formula representing an option that converts into a standard call option if the exchange rate falls to a certain level (barrier).

Surprise flashed across his face. He must have thought that I only knew the concept, not the details.

“I’ve known you’re a genius, Miss, but… can you really understand this?”

It’s a valid question. Even a genius can’t know everything. Absolute time is difficult to overcome.

But geniuses are experts, regardless of age, at least in their field of interest.

Therefore, I answered nonchalantly.

“I’ve studied a bit more after looking at all the materials you sent. Modifying the Black-Scholes model for exchange rates and barrier options results in something similar.”

The Black-Scholes model is so famous it’s called the F=ma of financial engineering, derived using differential equations and the normal distribution.

Although I couldn’t find a formula for calculating foreign exchange option prices among its variations, I had learned it in my past life, so I could even prove it.

It didn’t seem that famous at this point.

“Ah, yes. The Garman-Kohlhagen equation. A 1983 paper. You’ve found that?”

It came out that year?

Although I have perfect recall, it didn’t tell me everything, so I didn’t know. No wonder I couldn’t find it.

“Well, I’m a genius.”

Though slightly surprised internally, I laughed nonchalantly and sat on the soft sofa. Lee Sihyeon promptly placed a cushion under my legs.

“So, did you buy the options?”

I skimmed the documents, then gave up and asked directly.

“Yes. We bought around 50 million won worth from Dreyfus Fund on Wall Street… and some from Sony. Approximately 80 million won in total.”

“Tsk. It would’ve been better to wait until expiry.”

Nom.

I clicked my tongue, savoring a candy.

“It couldn’t be helped. Foreign exchange options have various maturity dates, and adding barrier options, the options were limited.”

I understand. That’s why I only invested 100 million won.

“Hmm, but the ledger shows a lot of purchased options.”

I tilted my head, sucking on my candy.

-Rustle.

I tossed the candy wrapper to Sihyeon and unwrapped another. Chocolate is better than strawberry.

My tastes have reverted to that of a child; I eat candy every day. It’s fortunate I have this indestructible transmigrated body that doesn’t get cavities.

“Ah… those are options I bought on the company’s behalf. I’m the executive director of a securities firm, after all.”

Looking at the portfolio, it seems they are relatively safe options.

“Right. To approach such large clients with only tens of millions of won wouldn’t do. You just bought everything at once and then transferred to me only what I wanted, right?”

It’s convenient working with intelligent people.

“Yes, exactly. Haha. Working with someone smart is indeed efficient.”

Oh.

Talent recognizes talent. I almost felt moved.

“After listening to you, Miss… I judged this position to be correct. If I didn’t believe you, I wouldn’t have bought the options.”

That is unexpected.

“Really? Even after I saved you from being fired?”

“I’m still a fund manager, and now an executive. I can’t make decisions harmful to the Chairman. Isn’t it the rational thing to do? If my judgment is correct, you’ve avoided risk. If it’s wrong, it’s time for me to retire.”

It seems it’s not yet time to retire.

Ha Jusung smiles warmly.

“Good. I’ll show you that judgment was correct.”

I smile back in response.

Following that, I spent a pleasant time with him. It sounds suspicious, but it was true.

We calculated option prices, adjusted volatility, entered them into formulas… even discussed the Plaza Hotel, which would end up in Trump’s hands in three years…

It was nice to be back in action.

Ah, this is living.

In my past life, I was a shut-in; I thought that life was okay…

But I seem to have gold, instead of blood, flowing through my veins.

“Alright! That’s enough for today. We’ve already bought options, haven’t we? Let’s meet again later. I’ll skip school on Monday, let’s discuss then.”

I clapped my hands, ending the day’s work. I still need plenty of sleep, even though I’m growing quickly.

Ugh. I’m already sleepy.

Feeling lazy, I rode on Sihyeon’s back to the car. Then… I must have fallen asleep in the car.

I woke up at home.

***

On September 20th and 21st, Ha Jusung was busy with Triple Witching Day, so we didn’t meet. We met again at Daeha Securities on Sunday the 22nd.

On this quiet Sunday, I went to Ha Jusung’s office.

He welcomed me warmly, handing me another document. It was a dollar put option.

“I added the remaining 20 million won. It feels different seeing you after two days, Miss, haha. Have you grown taller?”

Maybe?

I stood on my tiptoes in front of a mirror, tilting my head. I think so…

I’ve grown taller than most kids my age, but I’m still a little kid. I pout and turn away.

“Hey, I don’t know. I’ll grow on my own.”

Lee Sihyeon, concerned about my intense work lately, whispers in my ear.

“You need to sleep early to grow taller, Miss. You said you’re going to stay up late tomorrow night?”

“It’s not that serious. I’ll just stay up until midnight. Because of the maturity date.”

I even took a long nap yesterday. And woke up late today.

There was one more headache because I had acquired options from various places.

They all had different maturity dates.

“Mostly London cut, but there are also New York cuts, and the ones from Sony are Tokyo cut.”

Options have different maturity standards. The New York cut, European options’ London cut, and the Tokyo cut used in Asia.

Usually, knowing the New York cut is fine, but since foreign exchange options use European-style options mostly, most of these were London cut options.

The Tokyo cut is also relevant to the yen’s value.

Based on Korean time, the Tokyo cut closes at 10 AM, the New York cut at 12 PM, and the London cut at midnight.

Fortunately, Ha Jusung had pushed the early Tokyo cut maturity date to the 24th. A 10 AM maturity would have been too risky. Losing everything if the rate doesn’t fall to 215 yen before then.

“…What about the ones from Wall Street?”

“London cut. Dreyfus Fund is a major mutual fund, so they’d use international standards.”

Good. The midnight maturity means a lower barrier, potentially leading to greater profits.

September 22nd. The Plaza Accord is today.

We nervously paced the office.

“Haa, this is nerve-wracking. We’re getting faxes from the US…”

“How much time is left? About 10 minutes?”

Seeing me staring intensely at the screen, Lee Sihyeon gently lifts me back.

“You’ll ruin your eyesight, Miss. Juice?”

“Tsk.”

This is unlike the Rangoon bombing incident two years ago.

Befitting an executive at Daeha Group, his office is equipped with telex and Reuters monitors.

Don’t worry about not understanding them. It’s expensive equipment for real-time international news.

-Static.

Ah, here it comes.

“At the Plaza Hotel in Manhattan, the five major Western finance ministers and central bank governors…”

…agreed to devalue the dollar by adjusting interest rates.

A thrill ran down my spine. I suppress a smile, watching the exchange rate screen.

The blinking screen displays the dollar/yen rate.

USD/JPY: 235.3

USD/JPY: 235.2

USD/JPY: 235.1

USD/JPY: 235.0

Then, perhaps due to excessive data, the screen flickers and then returns.

Ha Jusung, sitting closest to the computer, lets out a triumphant shout.

“Got it!!!”

USD/JPY: 234.6

The dollar is falling.