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Submitted by Nitpicker : Rev. Jim
Movie : Trading Places - 1983
Nitpick Category : Plot
Approximate time of Nitpick : 10-15 minutes to the end
Summary : Trading F.C.O.J. SPOILER ALERT (Refuted)
Detail : Let's start where Ophielia and Coleman give envelopes of money (T-Bills?) to Winthorpe and Valentine. They\n take an early train out of 30th street station in Phila. and go directly to New York. A taxi to the WTC, and they are ready\n to begin trading before the opening bell at 9:00am. Their first trading action is to SELL while the price is high. When the\n prices drop low, Louis and Billy Ray begin buying. Where did they get FCOJ stock before trading opened? Then they\n bought their stock back low, but they wont make any more money on it til FCOJ stock goes back up again. \n \n

Comment By :

 30581

Summary:

 Comment on comment 14577

Detail :

Just for interest, the trading units across the world’s commodity trading floors are called contracts. You can’t really have a share on these markets as the supply is unknown. On all markets you can buy, sell or sell short (contracts you don’t own) in order to either speculate or hedge a position. The process of matching buyers with sellers establishes the price. Selling short 100,000 contracts at $1.49 and buying them back at $0.29 would actually make a profit of $ 1,800,000,000 not $120,000! The size of one FCOJ contract is 15,000 lbs so making a profit of $1.20 a contract on 100,000 contracts would gain you 100,000 X 15,000 X $1.20 = a cool $1.8 billion! In any case, as someone has previously mentioned, there is a trading limit of 5 cents per lb per contract (a gain or loss of $750) so trading would have to cease for the day having reached this limited. This limit is put in place to protect the brokers and clients by means of having an intra day margin call (funds to be deposited against loss making positions) so losses can’t get out of hand. It also calms the market down and is part of a cooling off process. But after all, who cares, this film is meant to be a comedy!


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Trading

Posted At : 01/22/2008