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Authors: Luca Pesaro

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BOOK: Zero Alternative
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Sprague staggered out of the cabin, carrying the unconscious man on his shoulder
. ‘
Where?

She pointed to the opening where three metal steps led down to the murky waters of the South-China Sea, and helped him lean Tsun against one of the railings. They tied the weights to the man’s ankles, checking the knots twice before Sprague pulled out a small, silenced handgun
.

The woman slid to the side
. ‘
Just make sure you don’t spatter the entire boat. This has been a monstruos waste of time already
.’


Okay
.’

The muffled explosion was almost lost in the wind and she smiled as only a few blood drops splashed back onto the deck. Sprague leaned over and kicked the body overboard, where it bobbed
up for a second before sinking without a trace
.

The two traders left the Dorfmann building and went for a quick stroll around Broadgate, enjoying the sunlight. It was one of those rare but pleasant autumn days, the sun shining and the weather mild. Tony borrowed a Marlboro, as ever, and lit it with Walker’s lighter. He had been trying to quit smoking for years without any real success but had finally graduated to not buying packs anymore, preferring to pinch cigarettes whenever he could.

‘So how much are you up, you jammy bastard?’

‘Twenty-five million, maybe more.’ Walker shrugged. ‘Hard to tell with the Option market still closed, but I guess the models are not going to miss out by much.’

Tony whistled softly. ‘Jeez. Not bad, my friend.’

‘How are
you
getting on?’ He knew that Mendes had closed most of his book in the previous two weeks. The man was not a deep thinker, but his market instincts were often astounding. He had been Walker’s supervisor and mentor when he was just a desk junior, and had taught him many of the darker secrets of Volatility trading.

‘No disasters, yet. Down a mill, maybe two if it gets worse – nothing to worry about. I’m still going to finish the year well-up; I’ll just have to sit on my hands from now till Christmas.’

Walker nodded, silently agreeing. December 31st was the goal-line for traders and salespeople, when budgets were closed and the bonus calculations finalized. If someone had had a good year they tended to lay-off risk in the last quarter to avoid any nasty surprises. Dropping a bundle of money near the year-end was not an ideal strategy to maximize your own payout when the Envelopes were handed out in January.

And traders cared a lot about their bonuses, not only for the cash itself but because – in a world where P&L was calculated every second, and money made or lost sat as the ultimate measure of quality – getting paid astonishing amounts was proof that what they were doing was
right
. Money to a trader was like goals to a striker, Michelin stars to a chef, adrenaline to a base jumper. It was evidence of their professional worthiness, their importance, and their quality. Often, for many, it was the very air they breathed.

Mendes finished his cigarette and turned to Walker, eyebrow cocked. ‘So, have you started
hedging yet? Twenty-five bucks is a great
year
for anyone, you can’t afford to see it vanish.’

‘Not really. Apparently I’m not allowed.’

‘What? Why?’

Walker fought to keep the anger at bay: a good poker-face was standard requirement for a trader. ‘Olivier Fontaine is using my book as protection for the entire floor. I can’t sell off my Options and cash in the profit without his approval.’

‘That’s shite.’ Mendes sipped his coffee slowly, considering. ‘Un-fucking-believable. I’ve never heard of anything like this. They must be really worried.’

Walker grimaced. ‘I think they have problems in Fixed Income as well – the bond markets are going bananas and the Italian BTPs are tanking. The boys downstairs are going to get caught in the crossfire.’

‘Well, there goes my hope of a decent bonus this year, I guess.’ Mendes looked around, making sure no one could overhear. ‘What are you going to do? Be a good little soldier for Fontaine?’

‘Dunno.’ Walker lit another cigarette, his brain in overdrive. ‘What do you think?’

‘It’s a hard call. The book is your responsibility, but going against Olivier could land you into all sorts of shit. Especially if you get it wrong.’

‘True.’ But Walker’s instinct told him to go for it. He knew he could get the trade right. ‘I don’t trust that fat Belgian twat.’

‘You shouldn’t.’ Tony Mendes had been screwed by Fontaine years before, as well.

‘Then maybe it’s easy.’

Mendes checked his watch, gesturing with his head at the Dorfmann building. ‘Time to go. Be careful, my friend.’

‘I will.’

Chapter Four

Running DeepShare

Walker unlocked his computers and fired off a few quick messages on the Bloomberg Instant Chat, replying to the brokers and traders that he always kept online to his terminal.
Time to make or lose some millions, boys and girls
. His personal mobile phone rang and he glanced at the screen – Mosha Micovich was calling, for the third time. He hadn’t talked to the big Serb for over six months, but he could guess what this was about. Finally he answered, stepping away from the desk into an empty office nearby.

‘Ugly one, long time no speak.’

‘Hi Scott, how goes it?’

‘I can’t complain. Enjoying the fireworks today?’

Mosha grunted, his voice dropping a couple of octaves. ‘We are going to get murdered. Fuck Rossini. Fuck my stupid traders.’

‘You in trouble?’

‘Yeah, lots of it.’ The Serb paused, clearing his throat. ‘Any chance you might have some Options to sell?’

‘What do you think?’

‘With a nickname like “Yours”, I expect you’d be well placed for a big market drop.’

‘Indeed.’ Walker smiled, remembering dozens of discussions through the years with the hedge-fund manager. They had been at school together – never particularly close but always ready to argue economics or finance – and somehow they had managed to keep in touch throughout their careers. They were often fighting opposing views, Mosha the optimistic bull, Walker the doom-and-gloom bear trader. Still, if the Serb was prepared to pay well for protection, Walker would rather sell it to him than to some unknown grunt at a rival bank. Besides, Mosha had all sorts of weird connections and you never knew…

‘How much do you need?’

Mosha exhaled. ‘Twenty-thousand puts, front month or similar. To start with.’

‘I’ll see what I can do. Call Luigi Seu in half-an-hour.’
Screw you, Fontaine
.

‘Will do. Thanks, mate.’

Walker turned off the phone for good and glanced at the time: only three minutes to the Futures reopening. The pre-auction quotes were drifting lower, flickering around 2640 – a little less than seven per cent down on the day for the entire market. He stuck in a few more orders to buy another one-hundred-million-dollars’ worth before glancing at Steph, who had just returned to his own desk.

‘What?’

The young Frenchman looked a bit nervous. ‘A couple of the senior salespeople want to know if you could make prices for their clients. They need to buy puts for protection and everybody knows you have some to sell.’

Walker shook his head. ‘I believe we still have a Flow desk for that kind of thing, right?’

‘Yes. But the guys…’

‘Then tell them to fuck off. Politely.’

Steph bit his pen, nodded and scurried off towards the dozen or so rows of Sales and Structuring, near the floor exit. Walker picked up one of his dealerboard phones, pressed a button and waited while the machine dialled Luigi’s number. Seconds later the Italian’s voice boomed from the handset, excited. ‘Yo, bitch!’

‘How did you know it was me?’

‘Because I’m the best broker around.’

Walker laughed. ‘Sure. Listen, Mosha Micovich will be calling you later. I’ll sell him twenty-thousand November puts around the opening print, but then I want you or one of your kids to be on standby for my own orders from nine o’clock onwards. When you hear me or Steph, I expect you guys to drop everything and pick us up.’

‘As ever, great Lord. But that level of service…’ Luigi paused expectantly.

‘You greedy bastard. Fine, double the usual comm for today, one basis point of notional on my side.’

‘Really?’

Walker bit his tongue, but it was too late. He went through a quick mental calculation to figure out how much extra money he’d just spent. He had doubled the commission owed to the broker, up to one-hundredth of one per cent. It didn’t sound like much, but on a day like this he might easily
trade over one hundred thousand Options. That was close to three billion’s worth – three hundred grand of fees on Dorfmann’s side alone. And Luigi personally got almost half of that in his paycheck.

‘Yeah,’ he sighed.
Just forget it, and worry about the big picture
. He could hear the Italian’s smile in his voice as he replied, ‘That’s why I love you.’

‘I can imagine. Now go away and let me know when someone out there starts getting desperate.’

When the stock market finally reopened, it had returned to some semblance of normality. Walker watched the Eurostoxx drop a few points fast, then bounce a little to start trading in a wide range. He dealt sporadically, struggling to stay calm as his stomach churned.

Liquidity was scarce and the contracts gapped up and down, but the market felt a little saner as some traders and computers started finding their feet, especially the machines that now accounted for the largest slice of the volumes. It wasn’t likely to last, though.

A shout echoed from one of the salespeople rows, down into the Southern European – the Club-Med – desks. Walker ignored it and bought another thirty million dollars worth of Futures, mainly to pass the time. Unlike the machines, most humans were still rattled, both on the trading floor as arguments exploded with annoying regularity, and around Option markets, where prices jumped haphazardly, quotes disappearing within seconds of being posted. One of the prices Walker was about to hit flashed away and he swore, slamming his desk.

‘Temper, temper. You’re too old for that. And by the way, since you’re cleaning up, I expect you to buy the drinks tonight.’

Walker turned around and saw Thomas Setter, the ancient forty-seven-year-old DAX trader, standing behind him. ‘Jeez man, it’s a bit early to worry about beers.’

‘It is never too early.’ Even after years in London, Thomas’ thick German accent had never lost its edge. ‘I will book a couple of tables at the Brasserie Rock; tell the desk juniors to come along on your tap.’

‘Fine.’ He shrugged. ‘No managers, though.’

‘Of course. By the way, should I call my wife? Just in case…’

‘In case of what?’

‘I hear the Dancing Snake in Finsbury Square got a few new girls at the weekend. South American and Spanish, proper dirty. I can get a broker to pick up the tap…’

Walker sighed. ‘Thomas, fuck off and let me get some work done.’ He turned back to his computers and dived into some serious trading.

Later, when the nicotine craving started niggling, Walker checked his watch. It felt as if several days had passed but London was still a few minutes short of half past ten.
Time to make the big call
.

Rossini was due to speak in about thirty minutes, around 11 a.m. GMT, to tell the world what his intentions for Italy were, and prices would move in a flash after that. Walker thought he knew what he wanted to do, but this was a decision that could make or break the rest of his career. He studied the screens for a while, making sure that all his positions were correct, then buzzed DM on the internal line.

‘Hey, are you busy?’

His friend’s voice echoed tinnily from the small loudspeaker. ‘Always. Actually, I was about to come over.’

‘Good. Fire stairs?’

‘Sure, see you in a minute.’

Walker unwrapped a fresh packet of Marlboro Gold and crossed to the back of the trading floor, past hundreds of bankers hunched over their monitors and phones. He pushed open the de-alarmed fire escape, descending a few steps to the empty ‘smokers’ landing’. Though it was obviously against all regulations, a small outdoor ashtray stood near the glass wall; it was taken away every once in a while when there was some inspection, but always magically reappeared within a few hours.

Walker guessed that Dorfmann preferred ignoring the tiny fire-hazard to seeing its nicotine-addicted traders, salespeople and analysts disappear from the building. Someone had even unplugged a couple of the smoke detectors and replaced them with small security cameras. He lit up his Marlboro and exhaled, trying to relax and let his mind trawl through the various
market scenarios.

Seconds later DM appeared through the door, grimacing. ‘God, it stinks in here.’

Walker nodded gravely. ‘You should try it at three or four in the afternoon.’

‘You guys are mad. What’s up?’

‘Wanna go to the Snake tonight? We deserve a celebration.’

The mathematician looked at him, surprised. ‘Sure. I’ll meet you there around ten, if you want. Is this really why you buzzed me?’

‘No, of course not. It was just Thomas being a fucking idiot at the wrong time that threw me.’ Walker shrugged, pulled on his cigarette. ‘I’m about to make a huge trade, mate. What does Deep think of the market now?’

‘Alpha is very unclear.’ DM grinned. ‘It still wants to hedge partially and wait.’

‘I don’t give a shit about Alpha. What about our Omega – anything new out of it yet?’

DM pulled out a mini-tablet from one of his suit’s pockets. He smiled like a magician unveiling a trick and unlocked it, handing it over. ‘The monster is about to reverse its virtual portfolio and buy – it’s certain the market will turn back up.’

Walker glanced through the numbers and graphs on the small screen, tapping away at it as he calculated through the possibilities. When he was finally satisfied he nodded and gave it back, sucking a long drag of his cigarette.

‘Good to know I’m not losing my mind.’

‘Maybe you are.’ DM’s voice dripped with sarcasm. ‘Trusting a silly machine on its very first real-life test.’

BOOK: Zero Alternative
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