Eddie Murphy's Trading Places is one of my favorite movies of all time. However, I have always felt a twinge of guilt when I watched the movie with other people.

You see, here's my deep dark secret: I don't really understand what happened during the climatic scene at the commodities exchange! Lucky for me, Wikipedia has the answer:. However, by way of a fraudulent report, the Duke brothers are led to believe that the orange harvest would be less successful, necessitating greater demand for stockpiled FCOJ in orange products in the coming year, thereby driving the price up.

By capitalizing on this knowledge and the Duke brothers' misstepsthe protagonists are able to profit by manipulating the futures market as follows:. Unlike conventional stock, futures contracts can be sold even when the seller does not yet own any of the commodity. It does not matter how or where the seller gets the product, as long as, one way or another, he is able to provide it at that price at that time, even if it results in a sale at a loss to him.

It is strongly implied that they purchased additional futures on margin and made dozens or hundreds of millions more, since a lesser amount would not bankrupt the Dukes. At the same time, the Duke brothers purchase enormous quantities of FCOJ futures, even at relatively high prices, because they incorrectly expect that the crop report falsely suggesting a greater need for stockpiled orange juice will create a demand at even higher prices, securing them a profit.

When it turns out that the leaked report they were given was fraudulent and the true report is revealed, the price begins to plummet before they are able to sell off their contracts. So, they are left with an obligation to buy millions of units of FCOJ at a price more than a dollar per unit higher than they can sell them for, bankrupting them.

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Faos pointed out that the "climax" scene in Trading Places was "when Jamie Lee Curtis took her sweater off. It has bugged me for years. A great movie with a fab cast, and my limited knowledge of the stock market stumping me as to how buying for a high price and selling for a low price would make money. Can I DIGG this story? I'll take a rain check on the Digg.

Maybe we'll revisit it around Christmas, when they tend to play this movie nonstop. Thanks for the thought, though. Weird thing is, I thought I was the ONLY one who didn't know what the heck was going on either!!

You've put to rest one of those lingering unanswered questions I've always wanted resolved When it's equities being traded, selling what you don't have in anticipation of buying the equity at a lower price and then delivering it a few days later to receive the higher price is called selling short, just in case anyone wanted to know that tidbit.

I'm reading one of Jim Cramer's books and he is talking about that now. I just saw it again for the th timeand never could understand it, and always had this tinkle on the back of my mind about it, so thank you for thAt I have seen this movie at least 7 times and NEVER understood how they "won" at the end.

Trading Places questions and answers

I used to work for a commodities brokerage and retained exactly nothing from it because it seemed like imaginary number in math I can't tell you how many nights I have laid awake only after every viewing actually trying to figure out how they busted the Dukes. They are not buying at 1. They are buying and selling at the market rate, which changes as a consequence of their actions. The fact that the Dukes were trading on margin is independent of whether Billy Ray and Lewis do.

In fact, Billy Ray and Lewis deliberately do not trade with the Duke's trader, so that they will be left holding a bunch of expensive "buy" contracts at the nitto 1320 legends how to make money of the day.

Why didnt billy ray and lewis just wait for the price of FOJ to drop at its lowest before they start buying? I mean why did they start buying knowing the price is continuously going down? I always assumed that they moved 20, contracts based on Winthorpe saying "20," at one point. Been watching for years and never understood how in the hell they did it This helped me understand the movie.

My professor told us to watch this movie and when that scene came out, I was like The math is a little off in the examples but the ideas are right. The math you used was correct, but the numbers you supplied were wrong. With FCOJ futures, every contract is for 15, pound of orange solids. Now there are two ways that the contract can be satisfied- deliver 3, pounds of oranges OR buy another contract for 3, pounds of oranges at a different preferable lower price.

So what really ends of happening in the movie is this the Dukes' broker trading solutions forex contracts like crazy believing import stock data into metatrader the crop is bad less oranges coupled with same demand means higher prices.

But when the crop non ccpc stock options out to be normal the "fit hits the shan" for the Dukes but not for the good guys. Couple that over several tens of thousands of contracts and Billy Ray and Lewis could conceivably walk away with BILLIONS in gains.

Also, the cash they hand on hand didn't really matter, as they were trading on margin. I hope that clears it up the movie. Now to real life; this could never happen because it would buy gold coins stockton ca an entire industry, country, world economy, etc. The price of a commodity will trading places stock market floor stopped if it ever fluctuates more than 10 cents either direction during one trading day.

Trading Places - Wikipedia

You can understand why- if somebody drives the price up 10 cents by themselves, they either know something and they will spend the better part of their lives in prison or they are setting themselves up to be bankrupt.

I know that's long, boring to most of youand a little confusing but I hope that sheds some light. Also, this is Trading places stock market floor the "stock market".

This is commodities trading. There are some pretty good documentaries on Netflix explaining commodities trading which is now done online because the "pits" are gone. As a word of caution, please don't trade commodities if you are reading this. Leave it to the pros. You all know enough now to ruin your financial lives if you believe for one second that you can do this. I just said "ohhhhhhhhh! What is earnest money receipt agreement you for the explanation!!

I just watched the movie again for the umpteenth time, and your explanation moved me closer to understanding the deal than any of the others. But it still left me wondering how this all started? I've read that it began in Japan in the 17 the century with buying and selling "rice tickets. I still don't get "future's".

What Actually Happens At The End Of 'Trading Places'? : Planet Money : NPR

Could you break it down even more? Explain EVERY single step of the Japan rice selling and then tell how it has evolved to today's futures trading? I tried to reason it out: The contract is called a "rice ticket. He is hoping he can turn around and sell it to grocery stores for 40 cents a lb a few days later. But in order to get the money to pay for the rice on Jan. So now he has money to pay for the future debt--but he no longer owns the product.

Where did I miss something? The stock market trading curbs at least in the US didn't get enacted until after the crash. This happened in and -- Tiffany's even bought a full-page ad in the New York Times complaining about this. In March when the COMEX main commodities exchange put a new rule about buying silver on margin i. This would've been in people's minds at the time of the movie. Also, the Hunt Brothers going bust almost led to their main trader going bust, and folks were worried the reverberations of people owing other people would've led to some bigger scalps getting taken.

I learned earlier trading on inside information wasn't illegal until Dodd-Frank, unless I suspect the government found out there was chicanery going on about stealing the report. Beeks since he was carrying non-public government information, would've been in a bit of trouble himself.

What I can't understand is how those scribbled pieces of paper actually obligate people to honor this "contract" months down the road. Credit Cards Personal Finance. Frugal Living Career Life Hacks Best Deals Top PF Blogs. By Will Chen on 26 December 24 comments. Share on Facebook Tweet This Pin It. Investmentcommodities exchangeeddie murphyfutures contractsmoviestrading places. Is It Finally Time to Invest in Marijuana Stocks? Why Does the Stock Market Keep Going Up?

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Select rating Not useful Somewhat useful Useful Very useful Extremely useful Your rating: I should probably edit the title, but now I kinda think it is funny so it stays! Now I don't feel so alone in my confusion.

At long last- I also could never understand how they could sell before they had bought Wikipedia is a great source generally, I have found for explaining finance terms. Thank you for using my photo oranges yinnxp's Flickr kindly contact me at the email provided: Hi Will Chen, Thank you for using my photo taken from yinnxp's flickr.

Thankfully I put the right search terms into Google to find this post! Thanks for explaining it in a way I can finally grasp! You got the highlights correct, but missed some key points: The contracts they are buying and selling are for 15, units each. You beat me to it on point 4], about the trading on margin.

So a better estimate of their profit based on your figures is: That was the fricken best explination ever. Its true you wallstreet guys are wicked smart. Wise Bread co-founder, marketing director and attorney. The Best Travel Reward Credit Cards. The Story of the Visa Debit Card We Did Not Apply For. Top 7 Reasons Why I Use My Credit Card for Everything. The Best Secured Credit Cards. User Agreement Privacy Policy.