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Trading Places is a classic comedy that leaves viewers puzzled by its intricate ending. The film showcases the downfall of the wealthy Duke brothers, Mortimer and Randolph, as they lose their fortune in a clever twist orchestrated by the protagonists, Louis Winthorpe III and Billy Ray Valentine.
A deceptive financial maneuver on the trading floor, where the Dukes are outsmarted in the commodities market, explains this ending. The plot masterfully weaves social inequality, greed, and revenge into a satisfying and just ending.
In Trading Places, the plot revolves around an elaborate social experiment set up by the Duke brothers. The commodity brokers gamble to try to change someone's social status and hence manipulate their life. Their pawns are street hustler Valentine and successful broker Winthorpe.
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The Dukes ruin Winthorpe's life and raise Valentine's profile by means of a sequence of manipulations; but, their scheme fails when Winthorpe and Valentine team to exact retribution.
Winthorpe and Valentine use a bogus orange crop report to fool the Dukes into making disastrous financial decisions. Following the exact events and actions that resulted in the Dukes' financial ruin, this article will delve into the steps leading to their demise in a climactic turn of events in Trading Places.
How did the Dukes lose their money in Trading Places?
The turning point in Trading Places begins when Winthorpe and Valentine learn about the Duke brothers' scheme to profit from inside information. The Dukes have bribed someone to steal a government report on the orange crop forecast.
This report is critical because it will determine the price of frozen concentrated orange juice (OJ) futures. However, Winthorpe and Valentine manage to steal the report first and replace it with a fake one that predicts a poor crop yield, leading the Dukes to believe that the price of orange juice will skyrocket.
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Driving up the price of Orange Juice futures
Expecting the price to rise depending on the information they believe to be true, the Dukes tell their trader to buy as many OJ futures with the false report in hand. Other traders on the floor notice the Dukes' trader starting to buy significant amounts of OJ futures and conclude they have consistent inside knowledge. As everyone rushes to buy, this herd mentality drives OJ's future prices skyrocketing.
Selling at the peak
Knowing that the report they planted was false, Winthorpe and Valentine strategically wait for the price to peak before making their move. At the height of the frenzy, when everyone is buying,
In a cinematic moment in Trading Places, Winthorpe issues a critical command:
Sell 30 April at 142!
This means he is offering to sell OJ futures at $1.42 per pound. The other traders, convinced the price will continue to rise, quickly snap up these contracts, not realizing they are about to buy into a massive loss.
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The truth revealed
The turning point in Trading Places comes when the actual orange crop report shows on TV that the yield is rather normal. On the trading floor, this news shakes things as traders rush to sell their futures before the price falls. The price of OJ futures drops rapidly, falling from its peak to a mere 29 cents per pound.
Buying low, sealing the Dukes’ fate
At this moment of panic, Winthorpe and Valentine step in to buy back the OJ futures at a drastically reduced price. Previously selling these futures at $1.42 per pound, they are now buying them back at barely 29 cents per pound. This calculated action lets them profit greatly while simultaneously bankrupting the Dukes, who bought at a high price and have to sell at a loss.
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The Eddie Murphy rule and real-world influence
Interestingly, the financial tactic employed by Winthorpe and Valentine was not illegal at the time the movie was released. But it became illegal in 2010 with the "Eddie Murphy Rule," so named for the actor who portrayed Valentine in Trading Places.
Showing the long-lasting influence of the movie on actual finance, this rule was part of a larger financial reform prohibiting trading based on non-public government information.
The ending of Trading Places is a brilliant example of how clever strategy can topple even the wealthiest and most powerful individuals. Blinded by wealth and arrogance, the Duke brothers become victims of the very system they sought to capitalize on.
The perfect execution of Winthorpe and Valentine's plan results in their financial success as well as the ruin of the Dukes. The movie ends with a pleasing reversal of fortunes whereby the underdogs prevail and the bad guys receive their just desserts. With its timeless message, the complex story and deft use of market manipulation make Trading Places an ongoing classic that enthralls viewers.
