Chapter 35
Ch.35 Shall we buy?
After escaping the desert, we headed to Dublin, the nearest city.
“Master. This city is very different from the villages we’ve seen so far, isn’t it?”
Since the north, compared to the southern desert regions, has relatively more developed cities, this is perhaps only natural.
“Of course, it’s only natural since settlers have been here for a while.”
Leah, marveling at the splendid architecture and tall buildings, which rivaled or even surpassed those of the Old Continent, said,
“Now we’ve finally found a city fit for human habitation.”
Here, the distinction between villages and cities is clear, so Leah’s reaction was entirely natural.
“Right? The north is more developed than the south.”
As I said that, Leah looked around and asked,
“But Master, didn’t you say you had something to do here? What are you planning to do?”
Looking at the apples in a nearby fruit shop, I replied,
“Last time, our ship sank, and I lost all my assets. I’m thinking of taking this chance to increase my money.”
Seeing the plump, ripe red apples, I took out money and handed it to the shopkeeper.
“Auntie, please give me two of these.”
“Will this and this be enough?”
The shopkeeper, having taken the money, picked up the apples I pointed to and handed them to me.
I gave one to Leah, who took it and smiled.
“Thank you, Master.”
-Crunch.
Leah took a bite of the apple.
Chewing, she asked,
“But how are you going to make money? Surely not gambling?”
At Leah’s words, I opened my eyes lazily.
“Why would you think of gambling?”
-Crunch.
“Well… well… because gambling is known to make big money. I’m just worried.”
-Pip!
Pipi, tilting its head as if wanting to taste Leah’s apple, cried out, and Leah lifted the apple above its head so Pipi could taste it.
“Don’t worry. What I’m going to do is business.”
Knowing which items’ prices will rise with the resumption of trade between the New and Old Continents, there’s no way I’d gamble.
Soon, the price of magic grass will rise the most.
Magic grass is an herb effective for recovering from magic exhaustion for mages.
Dried crispy magic grass, rolled into a ball and lit on fire, quickly restores magic—it’s a specialty product of the New Continent.
Currently, it’s sold at a cheap price, but soon it will become extremely valuable.
Unlike the New Continent, the Old Continent doesn’t know about magic grass, so demand will skyrocket when trade opens.
It’s a miracle cure for those suffering from magic exhaustion.
“I’m going to buy call options for magic grass.”
“Magic grass? Call options? What’s that?”
“Follow me, and you’ll find out.”
Leading the curious Leah, I found a large trading house, its exterior and large signboard catching my eye.
-Zeros Trading House, Dublin Branch.
“Zeros Trading House…”
Zeros, a fairly large trading house in the New Continent.
This place should be good for making a decent profit.
Entering the Zeros Trading House building, a receptionist greeted me.
“Welcome to Zeros Trading House.”
I nodded in greeting to the man who appeared to be in his mid-thirties, and the smiling receptionist asked,
“What brings you here?”
“I’m here regarding derivative products.”
Explaining my reason for visiting to the branch employee, the receptionist nodded.
“Then please go to the second floor and find Mr. Shylock.”
I nodded at his words and headed to the second floor.
“Hmm… Master, you really are the owner of a trading house, aren’t you?”
I felt it was time to show my authority as a master after a long while.
“Of course.”
As I went up to the second floor, I saw middle-aged men sitting at desks, busily clicking abacuses or writing documents.
“He said to find Mr. Shylock, right?”
“Yeah. But…”
Seeing everyone busy with something, I felt finding Shylock wouldn’t be easy.
“Huh? Why are you here?”
At that moment, a man stood up from his seat and approached me.
“I came to see Mr. Shylock regarding derivative products.”
At my words, the man nodded and said,
“Ah, I see. The man by the window is Mr. Shylock.”
“Thank you.”
As I headed toward Shylock as directed, our eyes met.
A middle-aged man with brown hair and a gentle face stood up and offered me an empty chair.
“You must be the customer. Please, have a seat.”
Shylock offered a chair, and Leah and I sat down.
“Pleased to meet you. I’m Shylock.”
“Hello. I’m Hans. I came here today to purchase call option contracts.”
At my words, Shylock’s eyebrows rose sharply.
“Call options, you say? Just a moment.”
Rummaging through his drawer, Shylock pulled out some papers, put on the glasses beside him, and his eyes gleamed with a merchant’s sharpness.
“Alright, which product’s call options are you referring to?”
As Shylock busily flipped through the papers, I replied,
“I want to purchase call options for magic grass.”
“Magic grass… magic grass…”
Muttering to himself, he pulled out a paper and said,
“Found it. What strike price would you like?”
An option contract is the right to buy or sell an item at a specific price in the future.
For example, suppose you buy the right to purchase 100kg of magic grass for 10 gold a year from now.
If the price a year later is 20 gold per 100kg, you can exercise the right, buy 100kg of magic grass for 10 gold, sell it on the market for 20 gold, and gain a 10-gold profit from the difference.
Conversely, if 100kg becomes 5 gold, you can choose not to exercise the right.
Put options are the opposite concept, buying the right to sell.
Derivative products, dating back to ancient times even on Earth, are commonly used to mitigate risks from sudden future price fluctuations.
“What’s the current price benchmark?”
“Today, the price of magic grass is 10 silver per kg.”
“Then let’s use that as the benchmark price.”
The benchmark price refers to the price at which the right is exercised.
For example, assuming 1kg is 10 silver, if the price a year later is 11 silver, you gain a 1-silver profit and can exercise the right. But if it becomes 9 silver, no one would exercise the right.
Because it would be cheaper to buy directly from the market than to exercise the right.
“Hmm, what about the exercise date?”
“Let’s make it six months from now.”
As I said that, Shylock nodded and asked,
“Yes, six months from now… good. Then, how many contracts would you like to purchase?”
At Shylock’s words, I quickly calculated mentally.
Currently, in the New Continent, my entire assets amount to 13 gold.
Since 1 gold is several months’ living expenses for a typical family of four, I hold quite a substantial sum.
Considering future travels, I’ll need about 3-4 gold as reserve funds…
Then, should I buy about 10 gold worth?
“I’d like to purchase 10 gold worth.”
One contract is based on 100kg.
That is, purchasing 10 gold worth of contracts means buying the right to purchase 10 tons for 1,000 gold.
“Hehe… then the price required to exercise the right is 1,000 gold. Is that alright?”
In other words, I’ve only acquired the right to buy; actually exercising the right requires the enormous sum of 1,000 gold, but I don’t need to exercise it.
But Leah seemed to think differently, speaking with a surprised expression.
“A… a thousand gold?”
Leah’s voice trembled before the enormous sum of a thousand gold.
“Yes, I’m aware. Is such a purchase possible?”
At my words, Shylock nodded.
“Yes, it’s possible, but…”
Smiling faintly at my shabby appearance, Shylock trailed off.
“There’s an additional fee of 1 gold. Is that alright?”
I readily agreed.
“Fine.”
“Ma… Master? You don’t even have 1,000 gold, do you?”
Deliberately ignoring Leah’s embarrassing remark, I took 11 gold coins from my leather pouch and placed them on Shylock’s desk.
Soon, Shylock examined the gold coins carefully and said,
“Hmm. Genuine gold coins. Good. Let’s proceed with the contract.”
After purchasing the call options, Leah’s expression was not good.
How should I put it? It seemed like she wanted to say something but was forcing herself to hold back.
Only after finishing the contract with Shylock and leaving the trading house did Leah speak with a stern expression.
“Master, do you have 1,000 gold?”
“No?”
“Then can you prepare 1,000 gold by the contract date?”
At her serious words, I replied,
“There’s no need to prepare it.”
In about six months, the price of magic grass will nearly triple.
That is, theoretically, by selling the call option contract to buy 3,000 gold worth for 1,000 gold, I can gain a 2,000 gold profit.
Well, realistically, considering various factors, maybe around 1,700 gold worth?
Frankly, using this call option contract as collateral for a loan is also an option.
If all else fails, I can just sell the call option contract.
As I thought this, Leah spoke with a worried expression.
“Then how will you make the money? And what about that… right?”
“Exercise right.”
I corrected Leah’s words, and she shot back with a slightly flushed face.
“Yes, what if the price falls below the exercise price?”
At her words, I replied firmly.
“What kind of product is magic grass? Do you even know what magic grass is?”
At my words, Leah replied with a confused expression.
“No. I don’t really know what it is.”
Sighing at Leah’s complete ignorance, I explained,
“Haa… it’s an herb that recovers from magic exhaustion, found only in the New Continent.”
At my words, Leah was surprised.
“Really? Such a thing exists?”
“Yeah. That’s why it’ll become valuable when trade resumes with the Old Continent.”
In Destiny, there are items whose prices rise significantly at certain times.
Focusing investments on call options for those items makes accumulating gold coins effortless.
“Master, buy me some magic grass. I want to try it.”
At Leah’s words, I replied,
“Magic grass isn’t eaten; it’s smoked.”
“Smoked?”
“Yeah. It’s smoked. Want to go see it?”
I asked Leah, thinking it was probably sold at Dublin’s herb shop.
“Shall we buy some?”
At my words, Leah’s eyes sparkled as she nodded vigorously.
“Let’s go quickly!”
-Pip!
Thus, starting with the herb shop, Leah and I wandered around Dublin, sightseeing here and there.
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