Okay, can someone please explain to me what exactly happens on the stock market floor at the end of “Trading Places”? I understand that Wilson is supposed to be buying for the Dukes, but I didnt quite unerstand if Winthorp was buying or selling. Can someone shed some light on exactly what went on?
The Dukes thought the harsh winter would hurt the orange harvest, which would drive the price up. They intended to buy out the market while prices were still low. They went “long” on FCOJ.
Dan and Eddie knew the winter didn’t hurt the harvest and that prices would drop. They intended to sell at the high prices. They went “short” on FCOJ.
When the real crop report came out, the dukes knew they had been had, and tried to sell what they had bought before the prices dropped. When the price got too low, assumedly due to investor panic, Dan and Eddie started buying again.
It’s been a while since I’ve seen it, but I think Dan and Eddie might have sold again at the end when the price was either artificially high or back to normal.
Somebody else can explain how with commodities futures you can sell something before you buy it.
This should answer your question:
Thanks guys, that was really great! The end of the movie makes so much more sense now!
I saw it over the weekend too…I have a question though.
Winthorp and Valentine start to sell at the high price, and they get lots of buyers. How does that make the price, which was going up, suddenly start to go down? Just because someone hollered “Sell?”
So, it’s a big gamble, which the Dukes lost.
First of all, when you dump lots of shares, the price will go down a bit. However, in this movie, the sell-off coincides with the announcement of the agricultural forecast that OJ will be plentiful, so that the futures are worth less; the combination of bad news and a deliberate sell-off causes futures to drop like a rock.
The most fictional aspect of the movie was its ending before the inevitable SEC investigation.
Dangit! I so thought I was going to get to see Page Davis on the big screen. Bummer!
It’s been a while since I’ve seen the movie.
Remember this was just a movie. In actuality, it won’t have worked. As the price was rising, Dan and Eddie were selling more and more of what they didn’t have, their negative market position was exploding exponentially. They had nothing that would permit them to sell additional OJ futures.
Dan and Eddie’s position had unlimited liability, as there is no limit the price OJ might have risen to. The Dukes financial position was limited, they could only lose everything they had commited to paying for, the price could only drop to zero.