I’ve watched this movie multiple times, and I still can’t figure out how Winthrope and Valentine make so much money and the Duke Brothers go broke.
I understand the “buy low, sell high” tactic, but I’m still confused.
If you can explain the movie’s ending in very simple terms, I would be grateful! 
Read this.
Thankyou so much! I have a better understanding now…
Great explanation, the only thing I would question is the “fatal flaw” pointed out by Carl Speare. It would not be possible today, but it could have happened in 1983, when the movie was made. IIRC, trading curbs were instituted as a response to Black Monday, October 19, 1987, when the Dow dropped 22%. Before then, I think the scenario could have played out pretty much as written.
I’m pretty sure it could not have happened in 1983. The futures markets have always (well since the early 70s anyways when I was first aware of them) had daily price limits on how much the price is allowed to change before trading in that particular futures contract stops. The current (well 2003) limit on orange juice futures is 5 cents ($750) per contract. Trading is not allowed at more than 5 cents above nor 5 cents below yesterday’s settlemnt price. I’m not sure what the daily limit was in the 80s, but I doubt it was much larger let alone what would be needed for the movie to work. In addition futures exchanges have position limits on how many contracts anyone can buy. Currently this is 3000 contracts for orange juice. So the most you could lose in a day would be 3000*750.
I yield to your experience. I wasn’t aware that trading in commodities was more strictly regulated than equities.
That really helps me understand the movie - hadn’t got it before now. But another couple of things that confuse me about that scene
It’s been a while since I saw the movie, but if I remember right, that scene was a montage depicting an entire day’s activities. Eddie Murphy and Dan Acroyd walk into the bourse at the beginning of the day. At the end of the day, the Duke brothers are pleading to keep the bourse open longer, so they can try to recoup their losses.
You can write a legally binding contract on a cocktail napkin with a crayon. As long as the buyer and seller both understand the squiggles, it’s valid. And, in a room filled with several hundred people who all use the same squiggles for their livelihood, you can easily find someone who can translate it for a judge and jury.
If W & V were selling short, why did they need Coleman and Ophelia’s savings? Just as a safeguard if the plan tanked?
I don’t know anything about the markets, but do you need to pay something/somewhere to have a presence on the trading floor? Presumably not just any schmuck can walk in and start waving paper around.
Coleman and Ophelia were cautioning them not to lose their savings. It seems as if the implication was that there would be some risk of losing the money, not just spending it on a membership.
I think COMEX instituted a lot of safeguards after the Hunt brothers tried to corner the silver market.
I think you have to prove you have enough money to cover your losses before you go in.
Gah! Sorry.
Judging by how fast the Duke brothers’ money was not only taken, but they were removed from chairs on the Board afterward.
One problem I had with that scene is that red flags should have arisen at the SEC and the exchange because of the two unusual patterns of trading (first the Dukes and then Winthorpe & Valentine). Also, presumably Winthorpe and Valentine had to actually deliver the crop report somewhere and not just steal it.
Valentine delivers the fake report to the Dukes, disguised as Beeks. The report was copied/stolen in the first place, so no one would have missed it.
I’ve been reading up on this today, having been prompted by this thread. What an incredible story. I’m amazed no one’s made a film of it, a lá Barbarian at the Gates.
Clarence Beeks was hired by the Department of Agriculture to deliver the report (we saw this in the television news report when Winthorpe and Valentine first figured out the Dukes’ plan), perhaps from the research department to the Secretary of Agriculture. So your explanation would make sense if they stole the copy after his official delivery. But I assumed they stole it while he was en route to the Secretary of Agriculture
Beeks was corrupt, and was working on the side for the Dukes. He could well have been delivering a copy to the Dukes, as per the terms of their payoff.