trading places
i've always loved that film, but there is something about it that burned my head right out when i was a kid.
it's the stockmarket scene at the end. no matter how i tried, i couldn't for the life of me work out how they were making themseves rich by first selling and then buying shares in frozen orange juice. surely, they should buy and then sell? that made far more sense to me.
took years before i worked it out and i'm still not sure it actually makes sense.
then again, i'm not exactly a financial genius.
( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:01, 40 replies)

Orange juice is tricky
You do need to concentrate...
( Dervel OTBC, Fri 14 Oct 2011, 12:10, closed)

true

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:16, closed)

They were using the brother's money to buy at an extortionate price well over the value
So the brothers were losing money, but they were making money personally in commission on the sale of it?

I think.
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Fri 14 Oct 2011, 12:13, closed)

Your OJ theory is bitty.

( Dervel OTBC, Fri 14 Oct 2011, 12:16, closed)

I like your acid wit.

( scarpe We Stole Bikes, Fri 14 Oct 2011, 12:17, closed)

It's not to everyones taste

( Dervel OTBC, Fri 14 Oct 2011, 12:18, closed)

i think
they were selling what they didn't have at a highly-inflated price, knowing that said price would drop rapidly, with traders desperate to offload their shares once they knew the orange crop was fine. this allowed them to buy shares extremely cheaply, which they could then give to their earlier buyers, safe in the knowledge that the buyers had paid well over the odds, leaving them with a very healthy profit.
( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:16, closed)

You are not alone in your confusion:

www.wisebread.com/explaining-the-climax-scene-of-trading-places

Also, it was only when typing 'How does the share trading scam at the end of trading places work?' that it dawned on my that it's called Trading Places not just because the people trade places but that it's also set around a trading place...

That would almost qualify as an answer to the question if I had actually been mystified by it as opposed to just utterly unaware.
( scarpe We Stole Bikes, Fri 14 Oct 2011, 12:19, closed)

i was right!
this pleases me.
( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:25, closed)

Having read that,
I stand by my earlier comment.

I must confess to not twigging the dual meaning of the film's title, though.
( monster munch person, man, woman... camera... TV?, Fri 14 Oct 2011, 12:26, closed)

Short Selling
You buy up the goods at the current price but agree to pay later, by the end of the time period specified you hope the goods have a higher value than you paid therefore profit...
so in Trading Places as they knew what the harvest results would be they knew what price it would be at and therefore could start a buying trend that others followed then sell at specified times to ensure mass profit.

God I am boring
(Bonzodog29 is an unemployed sponge of the worst kind, Fri 14 Oct 2011, 12:19, closed)

Economics
really is a load of shit.
( monster munch person, man, woman... camera... TV?, Fri 14 Oct 2011, 12:21, closed)

Yeah!
Except this is more 'finance' than 'economics' - different subjects, y'know. But your point still stands
(Godwin's Lawyer is more evil than Hitler, Fri 14 Oct 2011, 14:00, closed)

that's about what i though
but explained far better
( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:22, closed)

Nearly.
Short selling is, er selling.

The plot was;

The crop forecast says whether there will be a lot of OJ, or not much OJ. If there's a lot, the price will fall. If there's a shortage, it will go up.

So, the *real* forecast said there would be a lot. They nicked it, and put one in that said there would be a shortage.

The Dukes, reading this, decided they would buy all the OJ futures, becuase then the forecast would come out, the price would go up and they could sell all their contracts at a profit.

The others guys, knowing the opposite were selling the futures (going short). They did not need to own anything, they could sell, then buy back later to make their position zero.

So, Dukes start buying, everyione sees this, start buying too. Market goes up. Eddie and Dan wait till market is high, then start selling. Then the crop report comes out, everyine sees it's a big crop. market tanks. Eddie and dan buy what they sold, much cheaper. Dukes sell what they bought, much cheaper. Dukes lose, E&D win.

By the way - why did they need to put their life savings into it? The futures exchange require you to put up a deposit, to cover any losses. Called an initial margin.

They also require something called a variation margin, if you burn through the initial margin. that's what they asked the Dukes for, and that's what they couldn't pay.

Simple, huh?
(username failed moderation, Fri 14 Oct 2011, 12:36, closed)

I'll agree that it's simple,
if you'll agree that it makes absolutely no fucking sense, whatsoever.

Edit: seriously, though, why would the person buying from you not just buy it from the person that you're buying from, given that you haven't actually bought it yet?
( monster munch person, man, woman... camera... TV?, Fri 14 Oct 2011, 12:43, closed)

Contracts...

You are buying / selling contracts to settle at the close of market at the agreed price. So you're kind of stuck with what you've agreed.

I think.

I have a habit of being wrong about most things - and I've probably misinterpreted your point
( Pooflake braces for an onslaught..., Fri 14 Oct 2011, 12:48, closed)

When you buy/sell
a futures contract, you ar obliged to deliver or take delivery of the goods when the contract expires.

So, if today you buy a December OJ contract, you are obliged to take delivery of xx tonnes (or whatever) of OJ, in December.

But, if tomorrow you sell an OJ contract, you are obliged to deliver the same to whoever bought it.

The exchange though, will nett out your position. You have bought one, and sold one, therefore your position is zero.

You can hold your long/short position until the contract expires. This can be many months ahead.

So the trick is, to buy low, and sell high, or sell high, then buy low. Unless you;re actually wanting a shitload of frozen orange juice, you always need to nett out your position before the contract expires.
(username failed moderation, Fri 14 Oct 2011, 13:10, closed)

piggies
I did hear of one futures trader in pork bellies who forgot to settle, and got a surprisingly large delivery of pigs one morning.
(Simian Typewriter Supplies Pty. Ltd. is house hunting in the neighborhood of infinity, Fri 14 Oct 2011, 14:06, closed)

There are a few stories like that.
We had a girl in the office who forget to close out a small position in sugar futures.

Conversation went something like;

"Here, I've got the excange on the phone, say we've got to take delivery of 50 tons of sugar"

"Who fucking did that??"

"Jackie did. What do I tell this bloke??"

"Tell him to take it round and dump it in her fucking garden"
(username failed moderation, Fri 14 Oct 2011, 14:15, closed)

When you're trading futures
you're not actually buying from or selling to any named party. Your contract is with the exchange.

When the contracts expire, the exchange will then match buyers and sellers.

If you have bought and sold the same number of contracts, you will not be required to receive or deliver anything.
(username failed moderation, Fri 14 Oct 2011, 13:12, closed)

Beef jerky time!...

( Pooflake braces for an onslaught..., Fri 14 Oct 2011, 12:32, closed)

please to be helping me with my rucksack

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:35, closed)

Arsenal football club...

Used to have a player called 'Emmanuel Eboue', and every time he was on the screen I would yell:

"Eboue, Eboue, Eboue HA! Eboue, Eboue, Eboue HA! HA HA HA HAAAAA!!!"

from the train scene.

I'm surprised I'm not more popular in the pub.
( Pooflake braces for an onslaught..., Fri 14 Oct 2011, 12:45, closed)

buy more rounds

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:49, closed)

NEVER!...

I am as tight as a duck's arse swimming backwards.

I will just have to rely on my glittering personality.


oh
( Pooflake braces for an onslaught..., Fri 14 Oct 2011, 12:51, closed)

i can see that ending well

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:56, closed)

sorry...
...but I never got past the image of Jamie Lee Curtis's puppies burned on my teenage retinas.... I think it was the ploy to divert attention from any plot holes or difficult trading concepts.

Worked for me...
(SausageWarrior destination Zululand, come on boys jump in the van, Fri 14 Oct 2011, 12:36, closed)

boobs don't distract me

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:40, closed)

Racist.

( Je suis un vagabond is an unfunny, up your own arse middle class knob, Fri 14 Oct 2011, 12:42, closed)

no, just not a lesbian

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 12:48, closed)

GAY.

( Je suis un vagabond is an unfunny, up your own arse middle class knob, Fri 14 Oct 2011, 12:58, closed)

It's the curse of being a boy
they give me a fizzy willy and I can't think straight anymore
(SausageWarrior destination Zululand, come on boys jump in the van, Fri 14 Oct 2011, 15:22, closed)

that's understandable

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 16:50, closed)

I watched it again on Sunday and I still don't get it
but as noted above, tits
( emvee cruor deo cruoris, Fri 14 Oct 2011, 14:56, closed)

Interestingly...
(Disclaimer - probably very boring)

Bearing in mind that the above have explained short-selling, margin calls and contract exchange, I thought I'd just mention that this film did actually lead to a change in the US law on insider trading, namely the Transparency and Accountability Act under the Dodd-Frank reform to stop people making money from information stolen from the US Government.

Betcha didn't know THAT yesterday...
( Hunter Stockton was murdered by a bicycle wielding axolotl,.,.,.,., Fri 14 Oct 2011, 15:11, closed)

But they stole it from
the guy on the train!

Also, possibly also boring, haven't they clamped down on short selling on the stock markets in Europe?

You couldn't stop it on commodity futures, but makes sense on stocks.
(username failed moderation, Fri 14 Oct 2011, 15:33, closed)

I think they've stopped short selling
cos the markets are fucked and the traders are making easy money by going short. It's only a temporary measure AFAIK.
( His Popiness the Hole Invaded Poland on, Sun 16 Oct 2011, 20:42, closed)

no, i did not know that

( Smash Monkey lowering the tone of the whole internet, Fri 14 Oct 2011, 16:50, closed)

I only watch that film for Jamie Lee's gazongas.

( Davros' Granddad a voice of calm reason in a world of spastics., Fri 14 Oct 2011, 19:40, closed)