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Anybody watch the movie Trading Places?

RMSistight

Golden Member
I remember Winthorp saying something like "Sell 200 April at 142" and "Buy'em"?

Anybody in the stock exchange? I don't understand how they got rich from that. Can anyone explain?
 
I was going to type it out, but I found this at another forum:

The papers the brothers had payed to get were reports on the Orange crop turnout for the season. The more oranges produced, the more OJ can be made, which lowers the value of a can of frozen OJ on the market. The report would have told them how much OJ was going to be worth once the report was made public, so they would be able to buy up all the stock before hand, driving up the price before selling it all at a certain price. Since Dan & Eddie switched the reports, they were going on reversed info, so they thought they'd be able to buy more stock longer than in reality (thus, they would be able to sell when it got to a certain number and laugh all the way to the bank.) When the Head of Commerce reads the real report, they find that the orange crop did better than they thought, so the price plummeted instantaneously. Since they had snatched up such a large portion of stock, they couldn't sell their trades fast enought to cover the loss of the price dropping from tens of dollars to just a few cents per trade. Since Dan & Eddie sold all their stocks at the peak price (because they knew), they became millionares while the brothers were reduced to rubble (until Eddie makes a generous donation to them in Coming to America.)
 
Originally posted by: mpitts
I was going to type it out, but I found this at another forum:

The papers the brothers had payed to get were reports on the Orange crop turnout for the season. The more oranges produced, the more OJ can be made, which lowers the value of a can of frozen OJ on the market. The report would have told them how much OJ was going to be worth once the report was made public, so they would be able to buy up all the stock before hand, driving up the price before selling it all at a certain price. Since Dan & Eddie switched the reports, they were going on reversed info, so they thought they'd be able to buy more stock longer than in reality (thus, they would be able to sell when it got to a certain number and laugh all the way to the bank.) When the Head of Commerce reads the real report, they find that the orange crop did better than they thought, so the price plummeted instantaneously. Since they had snatched up such a large portion of stock, they couldn't sell their trades fast enought to cover the loss of the price dropping from tens of dollars to just a few cents per trade. Since Dan & Eddie sold all their stocks at the peak price (because they knew), they became millionares while the brothers were reduced to rubble (until Eddie makes a generous donation to them in Coming to America.)


Thanks for the info.
 
They were buying and selling futures

"Sell 200 April at 142" means "Good morning gentlemen, I am offering 200 Orange Juice contracts at the stellar price of $142 per contract. Are any of you interested?"

Basically, while the Dukes trader was buying everything on the market and driving the price up, they were "selling short" - meaning selling Orange Juice contracts they didn't own. When the price plummetted, they bought back enough contracts at the much lower price to cover the ones they sold earlier.

4... Profit!
 
Actually, they sell shares they do not have after the Dukes drive up the price. When the report comes out and the shares drop, the buy to cover the shares they previously sold.

At least, that's what I gathered.
 
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