This is actually a question I've been asked on a couple of occasions, usually after the cable networks begin their annual holiday Trading Places bender. Because the marriage of modern finance and comedy is (thankfully, as far as most people are concerned) rare, Trading Places is pretty near and dear to my heart.  The movie's climax hinges on a plot by elderly financial scoundrels the Duke Brothers to speculate on frozen concentrated orange juice futures using a stolen U.S. Government report.  In order to understand what's taking place at the end of the movie I think it's best to give a brief overview of the futures market before discussing the film.

The Futures Market

At its most basic level, a futures transaction is an agreement between two parties to deliver and take delivery of an underlying item (in this case a commodity-- orange juice, to be exact) at a future date.  The price paid for the contract represents the investor's "best guess" as to what the price of the commodity will be at the future date.  The key concept here is that price of the underlying commodity changes over time, while the price of the contract is fixed.  For example, let's say that I buy a coffee future for $100/bushel.  For easy math, we'll assume that the contract is only for one bushel.  I have now agreed to take delivery of a fixed quantity of coffee at that price.  After a couple of weeks a rare type of weevil descends on Colombia and ruins the coffee crop. Because the weevils have severely limited the coffee supply, the price rises to $200/bushel.

The next part is a little confusing, but stay with me.  Futures contracts are settled after each trading day.  This means that as the market price differs from the contract price,  one party has to pay the other.  In our coffee example, the seller of the contract that I bought would have to pay me $100 (note that I would have to pay if the price had decreased).  There is no wealth created; the party that profits does so at the expense of the other party.

The Movie

The Dukes' plan is to acquire, via the services of Clarence Beaks, a government crop report before its released.  They are foiled by the Murphy/Aykroyd contingent (along with the butler who looks like a hybrid of Phil Collins and the guy from Magnum, PI).  Murphy's group intercepts the actual crop report and substitutes a false one.  Based on the information contained in the report, the Dukes are led to believe that the Florida orange crop has been damaged by weather and they instruct their buyer to buy as many contracts as possible.

As trading opens in the movie, the Dukes' buyer is buying and forcing the price to increase.  Just before the crop report is broadcasted, the Murphy/Aykroyd group offers to sell contracts.  It's been a while since I've seen the movie, so I don't remember the exact dollar amounts involved, but let's say that they sold at $200.  After the real crop report is broadcast, and it becomes public knowledge that the orange supply has not been affected, the price begins to fall.  After the price free fall for a while, Murphy and Aykroyd buy contracts at a lower amount, say $50.  They now have outstanding obligation to deliver orange juice for $200 and to take delivery at $50.  Assuming the number of contracts is the same on both sides, Aykryod and Co. (and let's not forget hooker with a heart of gold Jamie Lee Curtis) have bought and sold   orange juice and made $150/contract in the process.  Because the contracts offset, they don't have to deliver anything or receive anything. On the downside, this cash windfall allowed Eddie Murphy to mail in the rest of his career (add Beverly Hills Cop 3, Metro or I-Spy to your Netflix queue if you don't believe me).

With the possible exception of cage fighting, the futures market represents competition in its purest form.  Its a complicated animal that is equal parts finance and psychology.  Hopefully the next time you find yourself watching Trading Places on basic cable, you will be able to impress your friends.