Explain the stock exchange scene in trading places

Posted: AnnaTamila Date of post: 25.05.2017

Send questions for Cecil Adams to: Your direct line to thousands of the smartest, hippest people on the planet, plus a few total dipsticks. Publishers - interested in subscribing to the Straight Dope? User Name Remember Me? Password Register FAQ Calendar. Explain the stock exchange scene in Trading Places? I know this isn't CS but this really isn't a CS question. In Trading Places, I understand why Dan and Eddie's characters are selling their stocks of OJ while the price is high, but why do they all of a sudden start to buy when the stock is hit low?

That I don't get. I mean, is there any logic to this? Buying a bunch of stock that low? Surbey View Public Profile Visit Surbey's homepage! Find all posts by Surbey. Having previously sold a lot of futures contracts as opposed to stocks that they don't own, at a very inflated price, they now have to buy the contracts that they are expected to deliver in five days, at a very deflated price.

Explaining the climax scene of "Trading Places"

They profit on the difference. Had the price gone up, they would have been in the ones who lost. Triskadecamus View Public Profile Find all posts by Triskadecamus. Here's a previous thread on this: Arjuna34 View Public Profile Find all posts by Arjuna The wikipedia article also give a great explanation: One of the things which sometimes confuses about futures trading is the role of the Exchange.

Say trader A wants to sell tons of lima beans and trader B wants to buy, they enter into a futures contract which specifies a date on which the transaction takes place and a price. However, trader A does not have to deliver to trader B, merely to a designated place specified by the Exchange, and trader B can pick up his beans similarly. The beauty of the system is that now trader A can agree with trader C to buy tons of beans.

explain the stock exchange scene in trading places

Trader A now has no obligation to buy or sell a single bean because, via the Exchange, trader C now supplies all trader B's beans. If trader A is a canny operator he will have agreed to sell the beans to B for more than he agreed to buy from C, and he can walk away with the difference in cash. If later B and C get together and agree that B will sell his beans to C, then no actual beans need be traded at all and each trader gains or loses on the difference in price.

Common Tater View Public Profile Find all posts by Common Tater. If you lie, LIE to save the honor of a friend. If you cheat, CHEAT death on a daily basis. If you steal, STEAL time to get out and dive! One reason the futures market exists that companies like to take precautions against the cost of raw materials rising abruptly.

So an food company might take a fixed price for orange juice in 3 months time. If the weather is good in 3 months time and oranges are plentiful, then orange juice will be cheap to buy and the speculator makes a profit. But the company has 'peace of mind'. To give another example, part of the reason why Southwest Airlines was profitable after when the other airlines tanked was because of their successful handling of fuel futures.

They were paying a lot less for jet fuel than the other carriers. But what happens if their "provider", for a lack of better term, reneges or fails to deliver whatever commodity at the stated price? Is it really that crazy on the stockmarket? If it is, how could anything even operate?!? Technically, it was a commodity exchange not a stock exchange but I imagine they operate pretty simularly.

Little Nemo View Public Profile Find all posts by Little Nemo. Yes, it is pretty confusing.

It took me several viewings and a bit of research into the stock market before I worked out what was happening. Firstly, it concerns dealings in the commodities market, specifically stockpiles of frozen concentrated orange juice FCOJ.

The value of FCOJ depends on the current availability of fresh oranges. If there is a poor harvest then FCOJ becomes valuable. If there is a good harvest, with fresh oranges in plentiful supply, FCOJ becomes near worthless. Secondly, when buying and selling shares and commodities, the rules allow a trader to sell commodities BEFORE he has bought them, and then aquire them later. Then he has to buy the units to pass on. If the price has fallen between selling and buying, he makes a profit.

If the price has risen, he has to pay the higher price, and makes a loss. This is called "SELLING SHORT" and its a perfectly legitimate practice. Now that you understand that, heres the plot: The report says there is a good harvest. This would put down the price of FCOJ.

This would increase the price of FCOJ.

explain the stock exchange scene in trading places

All their purchases trading causes the price of FCOJ to go up. The harvest is good, so the price of FCOJ plummets. Peter Morris View Public Profile Find all posts by Peter Morris. That forced them to be completely broke.

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Search the board for "trading places". This has been done dozens of times. Eleusis View Public Profile Find all posts by Eleusis.

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It's time for someone to explain the ending of Trading Places

Originally Posted by Triskadecamus Having previously sold a lot of futures contracts as opposed to stocks that they don't own, at a very inflated price, they now have to buy the contracts that they are expected to deliver in five days, at a very deflated price. Find all posts by Common Tater. Originally Posted by Common Tater Sell high, buy low! Find all posts by glee.

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What Actually Happens At The End Of 'Trading Places'? : Planet Money : NPR

Originally Posted by Common Tater They still are. Find all posts by Princhester. In my own little world Originally Posted by Surbey Is it really that crazy on the stockmarket? Find all posts by Leaper. Find all posts by Eleusis. San Antonio, TX Posts: Originally Posted by Surbey I know this isn't CS but this really isn't a CS question. Find all posts by JohnT. Switch to Hybrid Mode. Switch to Threaded Mode. You may not post new threads You may not post replies You may not post attachments You may not edit your posts BB code is On Smilies are On [IMG] code is Off HTML code is Off Forum Rules.

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