If you’re like me, your earliest introduction to the commodities market was the hilarious 1983 film “Trading Places.” In an early scene, Billy Ray Valentine (played by Eddie Murphy) is being instructed by the patronizing Duke brothers, Randolph (Ralph Bellamy) and Mortimer (Don Ameche), in the basics of commodities trading . “We are commodities brokers,” Randolph says.
“Now, what are commodities?” He indicates several items set out on a desk as visual props, including a cup of coffee, a loaf of bread, and a glass of juice. “Commodities are agricultural products — like coffee that you had for breakfast; wheat, which is used to make bread; pork bellies, which is used to make bacon, which you might find in a bacon and lettuce and tomato sandwich. And then there are other commodities, like frozen orange juice and gold.
” The brokerage makes its money, Randolph explains, by buying and selling contracts to supply those commodities, sometimes to clients who speculate that their price will rise in the future, sometimes to clients who expect the price to fall. Valentine, a former street hustler, listens to the explanation and remarks: “Sounds to me like you guys are a couple of bookies.” In truth, futures trading extends far beyond agricultural products like wheat or mineral resources like gold.
It is possible today to buy and sell futures contracts (also called derivatives or event contracts) on a vast range of intangible outcomes. Kalshi Inc. , for example —.
