Trading Places (1983): Orange Juice Trading Scene

[LawrenceLugar500]

Trading Places:: this movie changed my life.

[peaceful2300]

I AM STILL ALIVE AND I'M GOING TO WRITE ALL ABOUT IT! NO CENSORSHIP!!!!!!!

[peaceful2300]

this movie is about the Rockefellers and the long-term HOAX of all time - theirs, upon us. And what we can do about it

[peaceful2300]

WALTER SCOTT (the illuminati have been trying for hundreds of years to punish my family for this quote) THE WRETCH, CONCENTERED ALL IN SELF, IN LIVING FORFEITS FAIR RENOWN, AND DOUBLY DYING DOES GO DOWN, TO THE VILE DUST FROM WHENCE HE'D COME, UNWEPT, UN-HONOURED, AND UNSUNG. in the end this will be as true as ever, moreso, and seen by all. even tho i probably got the quote wrong :) oh well MK Ultra does mess with your head quite a bit. not enough, tho

[califinn]

How's the Ulcer Harry?

[pokemonyu]

F.C.O.J sound like a dirty word.

[pokemonyu]

High frequency trading.

[georgekush]

lol Happy New Year @ 7:59

[georgekush]

2:49

[jblfanforlife]

WE GOTTA KILL THEM MOTHAFUKAS....WE GOTTA KILL EM - eddie murphey LMAO

[sandrashort100]

How much would the Dukes owe in today's money?

[lion3p0]

I love how they both look so hurt and betrayed ,lol

[AUD1438]

He simply shorted the FOJ contracts knowing that the crop report was going to be bad.

[sejork]

Good movie

[burntbreadboy]

For a complete explanation of how they did it , google "dangerous logic trading places". Youtube won't let me post the direct link to the page

[biminij99]

I think what Winthorpe did is called a put option/covered call

[GreshamsLaw]

@biminij99 I think he just sold plain old futures contracts. Meaning, he committed to swapping frozen concentrated orange juice for dollars on a set future date (and at an agreed upon price with another market participant).

[biminij99]

@GreshamsLaw Oooohhhhh I see. Well that's the part I don't get. Doesn't he have to borrow the shares to do it? If so, who or where does he get the shares from.

[GreshamsLaw]

@biminij99 I know @crazyman8472 wrote about shares, but that's not quite right. Shares are ownership titles to companies - they say; 'I own a little bit of X company'. Here people are arranging promises to swap frozen concentrated orange juice (big blocks of OJ) and dollars in the future ('futures contracts'). They're saying; 'I promise' when they trade. Now not everyone can be trusted so there are rules to make sure people keep their promises - you have to put up money as collateral ('margin').

[biminij99]

@GreshamsLaw Okay I see now. Thanks for the info!

[crazyman8472]

@GreshamsLaw Thanks for the explanation! Yet another reason why I'll never work on Wall Street. :D

[626718]

@biminij99 they sold short future orange juice contracts when the brothers bid up the price earlier on, then covered (e.g buying those contracts back) after the the price collapsed:

[626718]

@biminij99

a simplified example:

I sold short 100 contracts of orange juice for 125 dollars a contract. I immediately make 12500 dollars, but I have a liability to deliver those contract in the future. To neutralize my position, I'll have to long the same contracts. And if I do it at a lower price. Say buying 100 orange juice contracts at 25 dollars a contract at a cost of 2500. These two transactions netted me 10000 dollars.

[626718]

@biminij99 I think it is also implied that Winthrop and Valentine employed some kind of leverage. They borrowed money to make their bets, since they have inside info. Similarly, the brothers also leveraged big time, which explains the margin call at the end of the day. and their subsequent demise.

[idmji89]

@biminij99 Very simples, the two old guys are trying to make huge cash by putting a ton of money on a long position (buy) Orange juice. ANd Dan akroyd either put a huge amount of money to go short ( sell) therefore he took all the old guys money . get it?

[idmji89]

@biminij99 then the quantity of oranges in the USA harvest is not forzen over and damaged, so their are now alot of oranges ( no shortage). When there is an abundance of something that means that the price goes down and vice versa.

[covekid71]

Does anyone know, exactly, what Winthorpe screams out, just before he and Valentine start selling...(at about 4:13 in the clip)? Thanks, in advance.

[GreshamsLaw]

@covekid71 Not sure, but seems like; 'Sell 1000 in April at 142!'

[biminij99]

@GreshamsLaw So the two old guys thought that the future prices would continue to go up since the "package" they received said that the crops WERE affected by the winter weather? That's why they kept buying? And Winthorpe knew that the prices actually would go DOWN in the furture because the crops were NOT affected by the weather. Which is why he offers to sell 1000 in April for 142? Sell high, buy low.

[GreshamsLaw]

@biminij99 I believe so biminij99! The old guys thought that traders would suddenly think; 'Woah, there's no more orange juice!' and Winthorpe knew that people would suddenly think 'WOW, there's loads and loads of orange juice!'

[biminij99]

@GreshamsLaw So the two old guys thought that the future prices would continue to go up since the "package" they received said that the crops WERE affected by the winter weather? That's why they kept buying? And Winthorpe knew that the prices actually would go DOWN in the furture because the crops were NOT affected by the weather. Which is why he offers to sell 1000 in April for 142?  Sell high, buy low. And they could buy back at really cheap price ( 29 ) which is what it crashed to.

[07volvo]

@covekid71 "sell 200 april at 142" he started shorting (selling) the april fjoc contract at 142 per contract and continued to sell down to 102 per contract. the orange crop estimates revealed that the the cold winter did not effect the crop which would lead to more supply and therefore a lower price. after the report was released the price fell drastically. he started to cover his short (buy) between the price of 46 and 29 per contract. a huge trade!!

[RickJ32]

@covekid71 He says "Sell 200 April at 142".

[epomerantz1]

This was filmed in 4 World Trade, actually the old Silver pit. Gold, Silver, Oil, Gas, OJ, Cotton, Sugar and Coffee were among the futures based in NY. I traded sugar for a number of years and knew some of the members used as extras in the film.

[ArcaneGear]

its like the grand exchange!

[1987AnimeBoy]

Does the whole trading market scene take place inside the World Trade Center Twin Towers?

[perk431]

..........i still dont get what the hell is going on in this scene.

[crazyman8472]

@perk431 Winthorpe & Valentine "shorted" FCOJ. They sold shares they didn't have at 142, then bought back what they needed at a HUGE discount (46) when the price crashed (final: 29). This is theoretically possible (assuming you have inside info like they had in the movie), but there are (allegedly) safeguards in place to prevent this from actually happening. Of course, how anyone gets anything done in all that noise is beyond me. ;)

[zehnkatzen]

@crazyman8472 True story - in 2010, profiting from misappropriated government information was made illegal. The vernacular for it was "the Eddie Murphy rule".

[dghgfan70]

@crazyman8472 - you would be surprised. I didnt think I could when i worked it but you get used to the noise and who to talk to. scary but true.

[07volvo]

@perk431 instead of buying low and selling they sold high and bought low. they started selling at 142 and started buying at 46. it looks like they averaged over 100 points in profit.

[SuperDachshund]

@perk431 I know exactly what's going on. First, understand they fed the Dukes BS with the orange juice report. Billy Ray and Winthorpe know the truth. The Dukes buy early and the price goes up as other traders think they know something (in other words THEY BUY TOO). Then when the price is very high, BR and W sell and rake in a lot of cash (they don't have to own any in order to sell. They just sell first then buy later. It's "buy low sell high" in reverse). BR and W sell hundreds of millions!

[SuperDachshund]

@SuperDachshund (cont). So BR and W sell like crazy which drives the price down hard (it takes a LOT of selling to make that happen) and make millions immediately. This makes the Dukes nervous. You only sell when you think the future price is going to be lower. If it goes higher, BR and W are screwed because they sold low and have to buy back at a higher price. Now BR and W are fat on cash and the REAL crop report comes out--bad weather will NOT damage the crops.

[SuperDachshund]

@SuperDachshund (cont) This means there will be LOTS of orange juice which means it will be cheap. This drives the price DOWN (The Dukes are SCREWED!). The Dukes have to sell now (when its low) when they were buying higher just minutes before. As people panic and the price falls, BR and W buy like crazy. They sold high, and bought back later on at a much lower price. It's exactly like borrowing a billion dollars and being required to pay back only one fifth. You're $800 million richer!

[ComfortableLate]

@perk431

Essentially they sold a bunch of OJ contracts at 142 and bought back at 46 and thus made a big profit. It seems chaotic but actually the "open outcry" is very orderly and everyone understood each other and each contract is recorded right away and settled at the end of the day.

[kxmode]

@perk431 Winthorpe & Valentine sold their options at a high in demand price. When the report came out that orange crops wouldn't be affected by the weather (the report those two old guys based their buying decision on), then Winthorpe & Valentine waited until the price got to around 30ish and then proceeded to buy in the panic. They made a bunch of money off Winthorpe's principle of "buying low, selling high"

[brotherkantutta]

Let the people starve. They will pay every thing for food.

[XxowendanxX]

@brotherkantutta what the hell does that have to do with anything LOL...

[XxowendanxX]

this was after the sub-prime mortgage crisis, right??...lol...two Saturday Night Live alumni...this movie is B.S., there's no way some random bum could pick up the skills to become a successful commodities trader in a couple months....did they really have these trading pits in the World Trade Center??...I doubt it...I thought Chicago was the home of this stuff...I know that Wall Street is near there but they trade stocks, not commodities..this is a great example of the races getting along...haha

[doctorx777]

@XxowendanxX Also, I don't believe you can't sell short to the extent they do in the movie unless you have access to substantial margin. They'd have to use the Duke firm for that.

[doctorx777]

@doctorx777 I mean, I don't believe you CAN sell short...

[XxowendanxX]

@doctorx777 also...don't you have to have some sort of credentials to go onto the floor and trade like that??..when the Dukes screwed Winthorpe out of his bank account and credit cards and such wouldn't they have made him lose his legal right to go out on the floor and trade like that??...also...assuming the Dukes granted Valentine the access..if either Winthorpe or Valentine were able to trade like that, was it legal for them to trade in their own name??..I thought those people trade for a firm

[wimblewomble21]

@XxowendanxX yes usually in the real trading world, you would forfit a penalty. Depending on where you trade, you may have your trading accounts suspended for anything as long as 9months to years. But some may just suspend all credit but still allow you to trade with cash. They would be allowed to trade in thier own name, providing that they do not trade inside the company. (whicht they cant do cause they aint got a company) and to trade, you must take a brokers exam and recieve a license.

[XxowendanxX]

@wimblewomble21 wow. okay.  so this scene, and what Winthorpe and Valentine did was actually plausible in the real world??

[wimblewomble21]

@XxowendanxX yes it is perfectly realistic and plausible. But you would need to be a good mathmetician, business minded, and great at economic predictions to acchieve this. They would have had to have bought the stock at a rediculously low price to sell the stock at such a cheap price and make a profit. Or otherwise they must either have money to burn, or a good collection of ferraris to sacreifice.

[XxowendanxX]

@wimblewomble21 but they weren't trading stocks, they were trading commodities futures...

[wimblewomble21]

@XxowendanxX More or less the same thing. Everything is based upon supply and demand. Wether it be in shares or commodities. It is a traders personal preference in what he/she or the brokerage firm wishes to deal in. Either way, the risks are all the same for each trader, no matter what the product being traded is. Shares and commodities work on the same systems.

[wimblewomble21]

@XxowendanxX funny you should bring this up, as this stituation happened to one of my american freinds today. He had bought a load of shares from Hertz a while ago at a cheap price, and today the Hertz shares rocketed in price. Bearing in mind he did predict Hertz new possible venture in bidding for another company, but today he managed to sell all of his shares. Selling them at different prices all through the day. He will be having some fine wine tonight

[XxowendanxX]

@wimblewomble21 congratulations to your friend!! well done.

[wimblewomble21]

@XxowendanxX funny you should bring this up, as this stituation happened to one of my american freinds today. He had bought a load of shares from Hertz a while ago at a cheap price, and today the Hertz shares rocketed in price. Bearing in mind he did predict Hertz new possible venture in bidding for another company, but today he managed to sell all of his shares. Selling them at different prices all through the day. He will be having some fine wine tonight

[burlone718]

@XxowendanxX Actually the NYBOT traded commodities, there were pits as well but the building wasn't in the towers. It was in One World Financial Center on Liberty Street. The Chicago Board of Trade (CBOT) trades commodities too. I do agree about a bum trading, my question is, when and how did he pass the Series 3.

[XxowendanxX]

@burlone718 well that's what I'm saying...certain premises about this movie seem hokey...I know it's just a movie...but they took a bum off the street and now he's like a brilliant commodities trader...no way!!

[burlone718]

@XxowendanxX I guess you just have to go with what Ernest Hemingway said "never let the truth ruin a good story"