Then, when the price falls as a result of the release of the real crop report indicating a good harvest, Winthorpe and Valentine buy futures at roughly $0.22 per unit. In this case, Winthorpe and Valentine first "sell" FCOJ futures at roughly $1.45 per unit, a price inflated by the Dukes themselves (the Duke Brothers' buying leads other traders to believe that the Dukes are trying to corner the market, causing a buying frenzy). 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 Here's the Scam
A contract to sell, say, 1000 pounds of FCOJ at $1.50 per pound in February merely indicates the seller's obligation to provide and the buyer's obligation to purchase the product at the specified price and time. Unlike conventional stock, futures contracts can be sold even when the seller does not yet own any of the commodity. By capitalizing on this knowledge (and the Duke brothers' missteps), the protagonists are able to profit by manipulating the futures market as follows: Understanding Futures Contracts 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. "With the authentic orange crop report indicating a good harvest of fresh oranges, frozen concentrated orange juice (FCOJ) would be less important to food producers and so would be likely to drop in price once traders heard the news. 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:
#Trading places cast movie#
However, I have always felt a twinge of guilt when I watched the movie with other people. Eddie Murphy's Trading Places is one of my favorite movies of all time.
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