Trading Places (1983) Poster

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  • The more money you invest, the more you get back on return. Billy Ray and Winthorpe invested their cash. Also, Billy Ray probably invested every dollar he has access to. Coleman and Ophelia gave them every last dollar they had for the scheme as well. Either for an equal share of the return profit or at least a return on the amount they put in. Regardless it netted all of them a boat load of money. Edit

  • The Dukes hired Beeks to steal the top secret government orange crop report which was a detailed forecast of how the new year's orange harvest was supposed pay out: if the weather in Florida and other orange producing states (like California) was cold in the winter, it would have an effect on the orange crop: oranges might freeze on the trees and be unusable to make orange juice. Therefore, the price of orange juice for the new year would rise. Billy Ray & Louis steal the crop report from Beeks on the train and replace it with a fake one that told the Dukes the orange harvest for the year would produce fewer oranges. When the Dukes arrive at the stock exchange, they tell their buyer in the pits to keep buying stock in oranges which drives the price of oranges up. However, when the real report is read and the Sec of Agriculture says the cold weather will have no effect on the orange crop, the price starts coming down and Billy Ray & Louis start buying up the stock futures from the sellers, driving the price of oranges down again. They end up cornering the market and earning hundreds of millions of dollars and also gain their revenge by forcing the Dukes to come up with the money they accumulated while buying the orange stocks and driving the price up. That amount, as read by the stock exchange manager, is $394 million ($1.011 BILLION in 2019 adjusted for inflation). The horrified Dukes say they don't have the money and they wind up with their assets frozen, their seats on the exchange put up for sale and their possessions seized to pay that amount. The final insult to the Dukes is how Billy Ray and Louis made a $1 bet ($2.57 in 2019 adjusted for inflation) to see if they could do it and how they flaunted that to the Dukes on the floor. Edit

  • The actual amount isn't given but the Dukes had to pay $394 million ($1.011 BILLION in 2019 adjusted for inflation) In the movie, the Dukes "shorted" oranges in a "margin" trade, using leverage.

    In a margin trade, you may bet $100, but you multiply your risk in the event you made the wrong bet. In some markets you can leverage it by 50x or 100x. In some forex market, they'll even let you do 200x.

    This means if you made the right bet, your profit is much greater than had you simply done a standard trade; however, you made the wrong bet, and you bet $100, you OWE the exchange $10,000 (assuming you bet only $100 and leveraged it 100x).

    Since the Dukes were trusted in the exchange, their leverage would have been very high.

    Though the movie doesn't say how much Billy Ray and Louis made in their scheme, we know how much they bet. As I recall it was somewhere around $100k or $150k (Ophelia loaned them ~$50k, and there was another ~$50 from someone in the group).

    I don't recall whether they used margin trading, but they sold at the top at around $140+ per share, just as the price peaked. Then, they "caught the falling knife" (trader's terminology for trying to time your buy when the price has reached its bottom) by purchasing the shares back at $29 per share.

    The $29 per share ($74.47 in 2019 adjusted for inflation) was an artificially low price and temporary, as a result of the Duke's influence on the exchange floor. That changed when the news reported that winter would have no effect on the supply of oranges; so the price would climb back up (and Billy Ray and Louis had lots of shares bought cheaply by that point). Edit

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