From: murphy@rock.enet.dec.com ()
Subject: Re: Trading Places
Keywords: Eddie Murphy
Reply-To: murphy@rock.enet.dec.com ()
Organization: Digital Equipment Corporation
Distribution: usa
Date: Thu, 7 Jan 1993 18:54:25 GMT


In article <1993Jan5.201318.27759@magnus.acs.ohio-state.edu>, cthorne@magnus.acs.ohio-state.edu (Charles E Thorne) writes:
|> Newsgroups: misc.invest
|> Path: ryn.mro4.dec.com!nntpd.lkg.dec.com!news.crl.dec.com!deccrl!caen!zaphod.mps.ohio-state.edu!magnus.acs.ohio-state.edu!cthorne
|> From: cthorne@magnus.acs.ohio-state.edu (Charles E Thorne)
|> Subject: Re: Trading Places
|> Message-ID: <1993Jan5.201318.27759@magnus.acs.ohio-state.edu>
|> Keywords: Eddie Murphy
|> Sender: news@magnus.acs.ohio-state.edu
|> Nntp-Posting-Host: bottom.magnus.acs.ohio-state.edu
|> Organization: The Ohio State University
|> References: <1993Jan1.204034.3665@cbnewsk.cb.att.com> <C0CHxA.6A@spdg.com>
|> Distribution: usa
|> Date: Tue, 5 Jan 1993 20:13:18 GMT
|> Lines: 45
|> 
|> In article <C0CHxA.6A@spdg.com> jallred@spdg.com (John Allred) writes:
|> >Here's my understanding of the strategy:
|> 
|> >1.  Murphy and Ackroyd intercept the real orange juice Crop Report,
|> >which said "no problems with the current harvest".  They pass on to
|> >the Dukes (the rich guys) a doctored report saying that there will be
|> >problems with this years crop.
|> 
|> >2.  The trader for the Dukes, acting on the bogus crop report,
|> >believes that the price for frozen concentrated orange juice (fcoj)
|> >will go up, so he starts buying contracts before the official
|> >announcement of the Crop Report.
|> 
|> >3.  Ackroyd lets the Duke's Trader buy for awhile (while most everyone
|> >else stays on the sideline, waiting for the official release of the
|> >Crop Report), which raises the price.  After the price rise, Ackroyd
|> >starts selling big volumes ("Sell 200 fcoj at 142" sticks in my mind
|> >as Ackroyd's first bid), which starts driving the price down.
|> 
|> I don't know the details, but it's my impression that selling large
|> volumes of futures short requires money, stock and/or credit.  The
|> commodity exchanges aren't going to allow someone to come off the street
|> and incur huges financial liabilities without some backing.

Eddie Murphy was working for a brokerage - with a clearing house.  Note
the scandal in Chicago in October...


|> >3.  Just before the official Crop Report release, Ackroyd has a huge
|> >short position, while the Duke's Trader has a huge long position.
|> >Someone is going to win big.  Someone is also going to lose big.
|> 
|> >4.  The real Crop Report is release, showing that there are no
|> >problems with this years crop.  Hence, there will be no shortage, so
|> >no price rise.
|> 
|> >5.  The current price is still somewhat high, since the Duke's Trader
|> >was buying so much before the report release, so every other trader
|> >starts selling, believing that the price will go down.  Since everyone
|> >_is_ selling, the price does go down.
|> 
|> >6.  Ackroyd and Murphy wait awhile for the price to go down more, and
|> >then say "Buy 'em", so as to cover their short position.  
|> 
|> >7.  At the end of the trading session, Ackroyd and Murphy have huge
|> >gains (they sold high, then bought low), while the Dukes have huge
|> >losses (they bought high, and sold low.)  
|> 
|> Charlie
|>