re: Trading Places: Need Clarification

I think you missed some points. Here's how I understand it.

-crop report fake, says winter had big effect on crops

-dukes start buying frenzy trying to corner the market, know they price will skyrocket when the report is released (so they think)

-valentine and winthorpe sell futures (that they don't have btw, you can do that). They sell a ton and the price goes way up and they rake it in.

-real report is released and price plummets. Now they have to BUY because they don't actually own any contracts to sell in the first place. So they buy back every future they sold and net the difference... which is huge.

So they walk away with a boatload of cash and didn't actually have to any physical product, nothing actually changed hands, which I find amazing. Money has only the value we assign it and the value they had was fabricated and made in 20 minutes haha.