A Stock Trader Explains the Economics of 'Trading Places' and Why There's Now an Eddie Murphy Rule Making It Illegal

A Stock Trader Explains the Economics of 'Trading Places' and Why There's Now an Eddie Murphy Rule Making It Illegal

Jul 15, 2013

Movie buffs: we don't need to tell you that John Landis' Trading Places is a comedy classic. The 1983 film stars Dan Aykroyd and Eddie Murphy as a commodities broker and Philly hustler, respectively, who (unknowingly) trade lives as part of an experiment orchestrated by the millionaire Duke brothers. Wackiness ensues. The film even inspired a real-life law dealing with insider trading, which used to be known as the "Eddie Murphy Rule." In the end, Aykroyd and Murphy's characters get rich, while the wealthy brothers who used them as human guinea pigs lose everything. Ah, justice.

For those confused by the actual economics of the plot the pair pull off, NPR offers an easy-to-understand breakdown of the plan at the center of Trading Places. The website spoke to a gentleman who spent years trading OJ options (the Duke brothers tried to profit from trades in frozen orange juice). The basic premise is that the brothers illegally obtained insider information about an orange crop. Murphy and Aykroyd's characters intercepted the brothers' plan, swapping the real report with a fake. The crop is strong, but the fudged report indicates the crop is bad. That screws things up on the trading floor for the brothers, while our heroes end up selling high, buying low, and becoming filthy rich.

Head to NPR for the nerdy financial details if you want a deeper understanding of things. Should we now discuss what the hell happened to Eddie Murphy's career?

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