The roller coaster of index fluctuations persisted for over half a month. On September 23rd, as the S&P 500 index fell below 310 points, Noah Scott finally received Simon's order to close positions. From September 23rd to September 25th, over three days, Westeros Company's 6,000 short contracts were liquidated at an average of around 307 points, earning Simon another $76.26 million in profit.
Additionally, one month after Run Lola Run ended its theatrical run, and as both parties maintained a close cooperative relationship, Orion Pictures didn't deliberately delay and promptly paid Westeros Company its total box office share of $32.51 million according to the contract.
Thus, excluding the loan he no longer intended to touch, Simon's total funds before the final maneuver had reached $387.33 million.
While Noah Scott and others were still puzzled by Simon's conservative strategy in September, after closing the positions and a brief silence of several days, on September 30th, Simon suddenly transferred all funds from Westeros Company's account at Lehman Brothers out.
Noah Scott finally realized that, whether Simon had discovered Lehman Brothers' shadow trading or not, he had become wary of them.
Wall Street was, after all, not that big. Moreover, the stock index futures market still used traditional open outcry trading methods at the time. The trading positions for index futures at the Chicago Mercantile Exchange were quite transparent. With a little observation and inquiry, Noah Scott basically concluded that Simon had dispersed his funds to several other brokers and had once again begun establishing large short positions.
However, Simon's seemingly 'misstep' in September made Lehman Brothers hesitant about following suit. Furthermore, another major Lehman client, Quantum Fund, almost simultaneously began establishing large long positions—completely opposite to Westeros Company's moves—in early October, deepening the doubts of Noah Scott and the others.
Though not yet as legendary as it would become, George Soros's Quantum Fund, with its average annual return of over 30% since its establishment more than a decade prior, had already made him quite famous on Wall Street.
On one side was the hedge fund titan with an outstanding track record; on the other, the suddenly emerged maverick from Hollywood.
Their strategies were completely opposite.
After several rounds of hesitation, American Express CEO James Robinson ultimately couldn't make up his mind, instructing Noah Scott only to observe from the sidelines.
$500 million in cash was not an amount any company in this era could take lightly. If the funds Noah Scott was managing incurred losses, the shadow trading would also be more likely exposed. In that case, James Robinson could forget about keeping his position as CEO of American Express.
As Lehman Brothers remained on the sidelines, time marched on relentlessly.
For this final gamble, Simon went all out.
Starting October 1st, the several futures brokers Simon had discreetly engaged began building positions aggressively at a rate of 2,000 contracts per day. Simultaneously, the North American stock market began declining more rapidly after entering October, with the S&P 500 index sliding to near 280 points in just two weeks.
Back in Los Angeles.
While Pulp Fiction wrapped, When Harry Met Sally... also officially began filming in New York on September 14th.
Having completed Pulp Fiction, Simon neither immediately dove into post-production nor rushed to New York, as the final cut of Final Destination was also completed in late September, leaving only one month before its October 23rd release date.
With Amy Pascal supervising, Simon wasn't worried about Fox's commitment to promoting Final Destination. However, to gain experience for Daenerys Pictures eventually handling its own distribution, Simon personally involved himself in these efforts.
Juggling numerous tasks, time inevitably flew by.
During this period, Paramount's psychological thriller Fatal Attraction, starring Michael Douglas, unexpectedly became a major box office hit.
Despite being dumped in a late-September 'graveyard' slot, Fatal Attraction had earned nearly $50 million in just four weeks, undoubtedly becoming another film—following Run Lola Run, The Butterfly Effect, and Beverly Hills Cop II—with the potential to break $100 million domestically in 1987.
Fatal Attraction's success reminded Simon of another, even more famous Michael Douglas film: Basic Instinct.
After several successful internal test screenings for Final Destination, Fox began urging Simon to complete the final script stipulated in their original contract. Prompted by Fatal Attraction, Simon recently outlined the script for Basic Instinct.
Days passed swiftly, and it was suddenly Monday, October 19th.
Inside the Palisades mansion.
Just after 4 AM, Simon awoke, completely unable to fall back asleep.
Entering the study next to the master bedroom, Simon sat behind the desk. Instead of immediately picking up the phone, he quietly reviewed the recent trading reports from the several futures brokers and the stock market reports from the past few days.
From October 1st to October 16th, over 12 trading days, Westeros Company had established a total of 26,700 short contracts on the S&P 500 index between 300 and 280 points, achieving 100% utilization of funds across all accounts.
Having bet the entire $387.33 million, even with absolute confidence, Simon couldn't help feeling anxious as the moment arrived.
Fortunately.
Certain events from his memory unfolded right on schedule.
Just yesterday, US Treasury Secretary Baker stated in a television interview that if West Germany did not lower interest rates, the US would consider further devaluing the dollar. The logic was obvious: if something was about to drop in price, holders would choose to sell.
If the dollar continued to depreciate, capital would inevitably flee North America.
The previous Friday had already shown signs of collapse in the North American markets. On October 16th alone, the Dow Jones had fallen from its August high of 2700 to 2200 points. The worsening trade deficit and fiscal deficit in the US third quarter had already made the North American stock market appear precarious.
Baker's utterly ill-timed remarks in the television interview were the final straw.
Simon believed things rarely happened without reason. Therefore, Baker's televised comments yesterday and the subsequent media frenzy naturally led him to think in terms of conspiracy theories.
Of course, these matters had little to do with Simon.
The New York Stock Exchange opening time was 9:30 AM Eastern Time. The Chicago Mercantile Exchange opened at 8:30 AM Central Time, which was synchronized with NYSE.
As for Los Angeles, Simon only needed to wait until 6:30 AM.
However, just after 6 AM, the three phones Simon had recently installed in the study began ringing one after another.
Although the official trading start time was on the half-hour, pre-market trading often began early on the floors of the New York and Chicago exchanges.
Before withdrawing funds from Lehman Brothers, Simon had discreetly opened index futures accounts with three investment banks offering futures brokerage services: Goldman Sachs, Morgan Stanley, and First Boston.
Although still unaware of Lehman Brothers' previous shadow trading, Simon believed they had likely discovered his maneuvers over the past two weeks. However, given the current situation, Simon couldn't afford to worry too much.
By switching brokers, even if Lehman Brothers continued to follow, it would at most add some resistance to Westeros Company's position closing in the coming days. Simon doubted Lehman would easily reveal Westeros previous trading records to other investment banks, prompting firms like Goldman Sachs to also follow his lead.
Wall Street competition was fierce. If Lehman Brothers did so, competitors like Goldman Sachs, while taking the bait, wouldn't hesitate to drag the angler into the water as well.
The traders from Goldman Sachs, Morgan Stanley, and First Boston successively informed Simon that, with over twenty minutes until the opening bell, a flood of sell orders for long contracts had already appeared at the Chicago Mercantile Exchange. The lowest quoted price had even dropped to 253 points—a plunge of 28 points from Friday's close of 281, nearly a 10% drop.
In Simon's first trade, it took a full month and a half for the S&P 500 to rise from 270 to 290 points.
Now, just over a weekend, and even before the official opening, the S&P 500 was already quoted 28 points lower. Even from a thousand miles away, Simon could imagine the ominous, oppressive atmosphere likely filling the trading floors in New York and Chicago.
Janet had entered at some point, still in her slip nightgown and barefoot. But today she wasn't her usual lazy kitten self. Her eyes were bright, and instead of cozying up to Simon, she quietly pulled up a chair across the desk, listening as Simon continuously took calls from Chicago.
Despite the 28-point drop—exceeding any previous single maneuver—Simon decisively rejected the traders' suggestions to close positions.
After finishing the three calls in succession, Simon hung up. Janet, her eyes sparkling, her expression clearly uncertain, asked in a hushed tone, "How much now?"
"Lowest is 253 points."
Simon answered, picking up the remote to turn on the TV—also recently installed in the study. The screen immediately showed the chaotic, boiling scene inside the New York Stock Exchange, accompanied by the commentator's nearly trembling voice.
According to the anchor, starting at 9 AM Eastern Time, a massive volume of stock sell orders had already piled up within just over ten minutes at the NYSE.
After listening quietly to the report for a moment, Janet turned to Simon, a hint of mischievous excitement—relishing the chaos—on her face, and whispered slyly, "Hey, darling, how much do you think it'll fall?"
Looking at her expression, Simon really wanted to pinch her nose but simply shook his head. "It's too chaotic; how could I possibly know?"
Janet blinked a few times, pouted, but didn't press further.
Although he knew Janet likely sensed something, Simon couldn't possibly admit it outright. It wasn't about lacking trust in her, but his own experience was simply too incredible. He couldn't handle the consequences if certain truths were uncovered.
On the TV screen, amidst the chaotic scenes switching between major exchanges, the final ten-plus minutes quickly passed.
6:30 AM Los Angeles Time. The New York Stock Exchange and Chicago Mercantile Exchange opened simultaneously.
In New York, the Dow Jones Industrial Average opened down 67 points and then began plummeting.
The scene at the Chicago Mercantile Exchange was even more staggering.
The S&P 500 index gaped down dramatically at the open, plunging from Friday's close of 281 points to 198 points—a terrifying 29% drop.
Westeros Company's short contracts had an average entry point around 290 points.
Based on the S&P 500's low of 198 points, each of Simon's short contracts now showed a paper profit of $45,000. Compared to the average margin requirement of $14,500, the profit margin exceeded 300%.
Of course, Simon didn't expect to close positions precisely at the absolute low of 198 points.
Since the index futures market at this time didn't use daily mark-to-market settlement, most wrong-sided long contracts wouldn't be force-liquidated as long as sufficient margin could be added before the next trading day.
Therefore, only those completely out of reserve funds would choose to cut their losses and exit. The number of short contracts available for closing today would certainly be far lower than usual.
Nevertheless, once trading began, Simon strictly set the closing range between 200 and 210 points. While closing short positions, Simon also began establishing long contracts within the same 200-210 point range.
October 19th, 1987, was undoubtedly a long day for many.
For Simon, amidst the constant phone calls, the day seemed to pass swiftly.
At 3:15 PM Chicago Time, 1:15 PM Los Angeles Time, the Chicago Mercantile Exchange officially closed.
Final tallies showed that, during the day's trading session, only 8,300 of the 26,700 short contracts in Westwood Company's accounts had been closed. 18,500 contracts remained, awaiting handling.
Additionally, Westeros Company had established 3,500 new long contracts within the 200-210 point range.
In the final phone conversations, the Morgan Stanley trader's tone clearly carried regret, subtly implying that Simon had been too greedy. If he had set a higher upper limit for closing positions, Westwood Company might have closed over half its positions today.
Once the federal government intervened to rescue the market, perhaps as early as tomorrow, the S&P 500 could rebound significantly, causing Simon to miss the chance for greater profits.
Simon wasn't too concerned about the trader's regret.
As long as things didn't change drastically, he still had at least two more days to close positions at low levels.