Fake Oranges And The End Of Trading Places Explained 

If you've ventured down to the comment section to tell me "Winthorpe doesn't say 2000, he says...", please only do so in reply to THIS comment thread or else it will be removed. So far I've had people commenting to say it's: -20 -30 -200 -2000 -20,000 -"Short" -"Navels" -“Down” -“Sell” So I'd much rather gather them all in one place and you can debate with each other.

"This is insider trading and unless your rich it's illegal." Most factual statement in this video.

Best line, Unless you're rich it's illegal.

I've watched this movie likely 5 or 6 times and I just figured out that I never really understood the ending and I still am amazed at the rack on Jamie Leigh Curtis.

As a commodities broker I can sum up the Futures markets in one sentence. "BUY LOW, SELL HIGH....IT DOESN'T MATTER WHICH YOU DO FIRST."

This movie started to make a lot more sense to me yesterday.

[5:20] "Sell 30 April at 142!" Selling 30 contracts for delivery at $1.42 per pound. Also, what they did in the movie was legal at the time. Everyone just assumed it was illegal. Only after Dodd-Frank was passed did it become illegal, some 28 years after the movie came out. They specifically called it "The Eddie Murphy Rule" when discussing it in the Senate committee.

"Don't try this at home, there are safe guards in effect." Wall Street Bets: Hold my beer.

The protections in place to stop trading volatility like this weren't implemented until the crash of 1987. The movie came out in 1983, four years before the markets "Circuit Breakers" were conceived.

When Ackroyd calls out the sell at 142 and everyone jumps on it it always gives me goosebumps

My uncle Carmen was in the opening credits. He was in a beret cleaning up some heads of lettuce. Always get a kick out of seeing him. Something to remember him by.

In college my finance professor told us about a friend of his, who was trading cattle futures. He lost track of one and got a call from the rancher asking him where he wants his cattle delivered.

At last, someone explained the profit.

"inside trading is illegal unless you're rich" OR unless you are a member of congress.

It's about time I've waited 30 no almost 40 years for an explanation. Thank you.

A fictional movie that collided head-on with reality this past week.

With respect to JHEBox's explanation, a poster from another video covering the topic made a good summary. "For those who are little confused, allow me to try to explain. The people on the floor are trading in future contracts for Frozen Orange Juice (FCOJ). Future contracts are a deal between a seller and a buyer: "I promise to provide this commodity at this time as long as you promise to pay for it at this price." It doesn't matter if you don't have the commodity or even the money right then, as long as you provide it at the time. Before, the Dukes received a fake crop report that says that the winter damaged the orange harvest. They think that this will cause the price of orange juice to rise. However, Valentine and Winthorpe know that the harvest was unaffected, and that the price of OJ will go down. Here's what the Dukes' plan is: 1. Borrow money "on margin" from the stock exchange, with the promise to pay it back. 2. Buy a lot of future FCOJ contracts to drive the price up. 3. When the crop report is revealed, the price of FCOJ will skyrocket because of the lower supply and higher demand. 4. They then sell all the contracts they bought up at a higher price than they bought them for, earning a profit. Here's what actually happens: 1. The Dukes start to buy up contracts, driving the price up. The other brokers think that they're trying to corner the market and start buying as well. 2. Winthorpe and Valentine offer to sell future contracts, causing the other brokers to start buying from them and drive the price back down. 3. The crop report is revealed: the orange harvest is unaffected and the price of FCOJ plummets. Everyone who bought the contracts, including the Dukes, is now trying to sell them and "zero their position" so they don't lose all their money. 4. Winthorpe and Valentine start to buy back all the contracts that they previously sold to zero their position, earning a profit on each purchase due to the lower price; however, they are careful not to buy any from Wilson, since they want the Dukes to be holding the ball at the end of the day. 5. At the end of the trading, Winthorpe and Valentine have bought back all the contracts that they sold, and have made off like bandits. Meanwhile, the Dukes are left holding a bunch of now-worthless contracts. They are hit with a margin call-a demand to settle their debts to the stock exchange immediately-and because they don't have the money to pay back what they borrowed, they wind up bankrupt. " Poster - PonyJosiah13 ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-RLySXTIBS3c.html

Insider trading commodities wasn't illegal back when the movie was made. It was made illegal in 2010 via the "eddie murphy rule".

I've been trying to figure out this scene for years! Good video but a few points: 1. They didn't start with nothing, in the video at 5:57 it talks about W & V not having any fake oranges to sell. But earlier in the movie they took JLC's savings (42K in T bills earning interest!) and Coleman's life savings and maybe Winthorp's 150K in his bank (although that was frozen by the IRS). So I'm thinking they must have bought at the beginning when the price was at 102, but how much of an of an initial buy could they have made with an investment of likely less than 100K in order to get rich and ruin the Dukes? This leads to the next point.... 2. At that time I believe commodities could be bought on the margin, meaning you only have to put 10% down in cash to start but at the end of the day's trading "margin call" happens and you have to pay the full amount if you owe. I think that was part of the reason of the big stock crash in the 1920's, stocks could be bought on the margin at that time. But I digress, so... next point... 3. I think Winthorp says "Sell 200 April at 142" not "20 April" which might make sense since they bought at a value of 10% of the actual value of the contracts ( on the margin). This would result in a gross value of ~250 million split 4 ways (200000 contracts vice the 2000 contracts shown in the video above) not ~25 million. This would make them ultra rich "Coleman you're about to become the richest butler who's ever lived!" 25 million split 4 ways would be great (especially in the early 80''s) but it wouldn't make them completely filthy rich. 250 million would! Or maybe I'm all wet! This is one of my favorite movies. :)

I´ve always felt the entire stock market sequence in the movie was so chaotic it seemed near impossible to understand what was going on without having general experience with stock trading. This explanation really helped, being suitably simplified.

Finally. After years of videos very broadly explaining what happens, we finally get a video that goes into the minutia of what actually happens. There is so much dense information provided at the end of that movie that it’s almost impossible for a lay person to understand what’s going on at first.

“Unless your rich, it’s illegal “- Hudge Funds Hmm hmm

My favourite Christmas film with compulsory viewing on Christmas Eve every year.

Despite it not being accurate, a scary thought came to mind watching this movie again recently. The Dukes wouldn't be the only people Winthorp and Valentine screwed over. Some analysts looked at the numbers in this scene and actually calculated that the two of them walked away with about 250 million dollars (hence why the Dukes also lost a 9 figure amount) by doing a short sale. Basically selling at a higher price than what they'll be paying for it after the crop report. So the other traders on the floor combined paid that 250 million, when they offered the buyout everybody likely sold to them at a loss. There's proof of this when we see that person on the phones yelling to their trader "we're gonna end up in debt!" meaning their position was approaching the red. Only reason the Dukes got the worst of it was because their trader had already bought up a considerable amount and when he tried to sell, Winthorp and Valentine made sure they didn't buy from him, meaning what they bought lost 394 million dollars in value after the report. So with that big of a drop, you can imagine how much value the rest of them lost if they didn't sell quickly enough or still had some on their books.

Not to mention that using misappropriated government information was specifically made illegal in 2010 under the Section 136 of the Wall Street Transparency and Accountability Act of the Dodd-Frank Wall Street Reform and Consumer Protection Act, under Section 746, aka "The Eddie Murphy rule."

Thank you for explaining this. The thing was that I always realized is that no one knows what the actual crop report is until it is announced so you are gambling which way to go. The Dukes wanted to get their hands on it so they would know which way to go right away so they'd win. It's like knowing the outcome before you start. Of course, the report they got was the opposite so it backfired on them.

What a wonderful time... the 80s... when people could take a joke.

“Unless you’re rich, it’s illegal.” Truer words have never been spoken.

This also helps to explain the movie "Margin Call" and the crash of the housing market of a few years ago. At the end, when they say "margin call, Mr Dukes", it all just sunk in..

You forgot to mention the Eddie Murphy Rule! “Until the Eddie Murphy provision (Section 746) in Dodd-Frank, trading on inside information in commodities markets was not illegal. To protect our markets, we have recommended what we call the “Eddie Murphy” rule to ban insider trading using nonpublic information misappropriated from a government source.””

I read somewhere that Winthrop and Valentine made over $200 million while the Duke brothers lost, as Randolph says, $394 million.

I've watched several of these that explain the end trade and this one is the only one that made sense, great work!

8:36 I LOVE how you used a Justin Trudeau picture to cover the "blackface" person! lol

Love the video. You missed the Duke's attempt to "corner the market". Believing the crop would be small, they tried to buy more fake oranges than the entire harvest of real oranges. They would then be able to name their price as brokers would have to pay any price to settle their contracts and keep their seat on the exchange. It's also the reason they were willing to pay any price themselves. The thing is, the Dukes should have known that almost all attempts to corner markets result in failure and loss.

Interesting part is Insider Trading wasn’t illegal back in 1983 when trading places was released it, it did however become illegal just one year after

One of the best explanations I have heard on RU-vid of selling short. Great job.

I also love the Margin Call the Dukes got. So darn fitting.

Great job! I thought that I understood this, but you have made it much clearer. Thank you, one of my all time favorite movies.

~5:30 He said "Sell 200 April at 142." I know because I pay attention to the subtitles on the DVD. On to of that, the number 200 pops up repeatedly in that scene.

Dude has blessed timing with this video, surpassing his next most viewed video by three times in on third the time.

Just a couple of comments: You've been told in the pinned tweet that he's saying "Sell 30 April at 142!" But that's not the total number of contracts he's offering all day; that's the number of contracts he's offering in a single transaction. And they execute many, many of those transactions. Very likely, the bulk of the $300M+ the Dukes lost ended up in their pockets. (And those of the butler and Jamie Lee Curtis.) The other reason a farmer might sell a futures contract, other than stabilizing the price, is to raise funds at a time of year when he might otherwise have no income at all. This way he can sell part of his crop ahead of time so he can keep his farm in operation until harvest. Finally: While there are safeguards against this kind of thing nowadays, back in the 1980s not only did those safeguards not exist, but not even insider trading -- where you execute trades based on information not available to the general public -- were illegal, at least not when it came to commodities. So that part is realistic for the time the movie was made.

'It turns out a con man is pretty good at financial trading' - in all fairness, they are all con men haha!

I've been wondering about this my whole life 🤣🤣🤣

Excellent explanation which has always fascinated me. I actually calculated these profit and loss balances on paper but now this video explains it. There is one more calculation I did. That would be the approximate net worth of the Bates brothers (or at least the liquidation value of their trading account) before they got wiped out. It was based on a presumption of taking the amount of their margin call and multiplying by two.

this has been an all time favorite movie of mine since i was a teenager, and i still love it the same 35 years later, untarnished eddie murphy at his finest, i know the movie word for word, the script was manificently written. absolute classic!!

Who's here after Watching the Gamestop rebellion?

Thanks for the explanation after 40 years

I grew up in Philly and remember when this came out loved it

7:54 25.2 Million dollars in 1983 when the film was set is now equivalent to $68,595,461.6 in November 2021 According to CPI inflation calculator.

I know someone that was a commodities trader when this was filmed. I'm told they actually filmed in the Gold pit, but there was an actual FCOJ desk. Also, I learned everything I know about shorting the market from Frozen Concentrated Orange Juice.

Unless your rich it’s illegal. Truer words never spoken.

Well done. For yrs I had no idea what they were doing. I'm going to sound so smart when I explain this next Christmas

"And unless you're rich, it's illegal" truest shit ever...

The thing was that for commodities it wasn't illegal at the time hence the "Eddie Murphy" rule being put into place in the 2000s if I remember right.

i just had to ask is what we seeing in the stock Market with gamestop silmler to the stock market scene in the end of this movie?

The slide at the end of the video is the best!!!

That was well explained. I shall forget the details almost instantly, but it was an interesting watch.

HOLY COW! Just noticed Giancarlo Esposito (from Breaking bad & the Mandalorian) in the prison cell at 1:12 , guess it shows how long its been since i saw this movie

Great movie!!! GameStop anyone??

Thanks for explaining this! I saw this film when I was 13 and I got the gist of it, because in school they had taught us supply and demand. If there's a great demand and a short supply the price goes up. If there's an overabundance of something the price goes down. Trading with insider info, of course, illegal, but I'm sure it's done all the time.

And now after all these years I finally know. Great video. Thanks man.

Even with the explanation making sense to me, it still all goes way over my head. I would be slaugtered in that trading pit.

Nudity for "some reason"? That reason is the 1980's, nuff said.

Awesome video, thanks so much for taking the time! Love this movie so much and always got the general idea but not the specifics. That was great to learn!

After 36 years I finally understand this now. Thank you

Excellent video. I’ve always wanted to know exactly what happened at the end of the movie. Too bad it was necessary to caution people about some of the racial language in the movie. In the 1980s adults could laugh at a joke and realize it was a joke and not be considered a racist. In a few years youtube will ban any reference that this movie ever existed as it will be deemed a racist movie.

Thanks for the definitive video! First of all, I can’t believe (what looked like) all of the traders in the pit would take up Dan’s offer at 142. There certainly would be some who would sell short. Let's imagine two guys (or multiple people pooling money together) who go into the exchange with the same idea in mind as the movie. They consider a 50/50 coin-flip, the result of the not-yet-disclosed crop report. Depending on their cumulative bankroll to start, the risk would be nowhere near the potential reward of $25.2 million. The reward/risk ratio would be enormous, even more so if they sold on margin. If the coin-flip didn’t go their way, they would lose their bankroll, but why would they care? Rich traders will try again next time (unlike the Dukes, who stupidly committed their entire worth). What’s to prevent anyone from doing this? OR, am I wrong? Meaning, if Dan and Eddie were wrong about the crop report, would they be on the hook for several million dollars?

And there were no trading pits at the World Trade Center. It was just a couple of office buildings. Futures trading happens at the New York Stock Exchange, over on Wall Street.

I've seen the film maybe a dozen times and have never understood this. Thank you.

Thank you very much for this video! I am asking this question because you seem to be around to answer sometimes... can you briefly explain how people standing in a pit, yelling and pointing with pieces of paper, turns into binding sales contracts? Does it have something to do with that stamp machine later on in the scene? I suppose I could just go read this, but heck I like this discussion section :)

"Don't try this at home." Reddit 2021:😏😏😏😏😏

many and many a long year ago I studied in Business Organisation in what would be "junior high" in the US. I thought I only learned two things 1) legally-speaking companies are people. And they are inherently psychopathic and you would be foolish to expect anything else of them 2) the only rates of interest higher than credit card companies are money-lenders who will break your legs if you don't pay-up But I now realise I learned (at least) three things. Because I always understood this scene of selling-short.

The best explanation, hands down. Thank you.

one month after this was posted, Wall Street Bets would become the stuff of Legends.

How timely. Even a shout out to wallstreetbets. This video has indeed aged well.

This movie came out when I was about 15, I've seen it now maybe 25 times and to this day I can only remember two pieces of fruit in the movie, and only for a brief moment, food and rent aren't the only things that cost money around here.

My entire life, this scene has plagued me. As a kid i was able to pass it off as incomprehensible grown-up stuff. THANK YOU for helping me redeem my adulthood 🙏

Great video compared to others trying to explain the same.

Basically they bought low and sold high - they just did it in the opposite order you typically think of things they sold high because it turns out that price was the peak when everyone thought orange juice would be scarce they bought low when the price tanked because people were desperate to unload once they realized orange juice would be in abundance they pocketed the difference

Kinda like we just relived the GameStop adventure!! Great explanation of the movie, btw!!

Caribbean retirement would sound pretty good right about now! 🏝🏖⛵🍹

Now I understand how Louis and Billy Ray got rich from the stock market. Thanks for the explanation.

Fantastic video. I have loved this movie since it came out. I've watched it so many times. At one time, I could have quoted most of the script from just about any part of the movie. I haven't seen it in a few years, though, so it came as a funny surprise when I recognize none other than Giancarlo Esposito at 1:12 having things explained to him by Eddie Murphy in the jail cell.

This was a great movie. I love it. Coming To America had the Duke brothers in a cameo.

He says, "Sell 30 in April at 142" - which means he was initially looking for 30 contracts. He could have stopped at 30 (which is why everyone was trying to jump on it) but he can buy as many as he wants.

that PSA didn't age well at all. in real life, the market, news, and social media would rally behind the dukes and save their asses.

THANK YOU....THANK YOU!!!! I knew a little about options trading, but you dumbed it down for me (in a good way) so that now I can explain it to other people and sound like I know what I’m talking about.

THANK YOU!! I could never figure out what it was they were selling at the beginning of trading! It was just a placeholder! Haha! Thank you for dumbing it down so I can understand it!

Yeah evidently it hasn't learned to stop volitility. Hedgefunds just got burned like the dukes.

It's - "Sells thirty April at one forty-two!"

Absolutely BRILLIANT!

Omg. Thank you so much for explaining this. I never ever understood what was going on!

Now explain how the hell anyone could make a trade on the floor with that much screaming and yelling going on.

WSB entered the chat ... and laughed.

Great video! But it got even greater between 9:02 and 9:12 !! That is glorious! Cheers to you for including that.

I love you. Ty. About time someone explains this.

Billy Ray Valentine: Oh, see, I made Louis a bet here. See, Louis bet me that we couldn't both get rich and put y'all in the poor house at the same time. He didn't think we could do it. I won. Louis Winthorpe III: [grinning] I lost... One dollar. Billy Ray Valentine: Thank you, Louis. Louis Winthorpe III: After you. Billy Ray Valentine: Certainly.

He's saying sell short April 142.

Didn’t need this explained but I love this movie, so I click and like! Nice to see the actual numbers tho :D I was born in the early 80s and watched it as a kid too. Wonder how much of it I understood at the time.

Thank you so much for the explanation, Me and my boys watched this ending like 5+ times trying to figure out how much they made, gran it we were half baked didn't help either lol