GameStop/Reddit just showed what you can do with a $600 stimulus check and screw over The Man at the same time.
For those who are little confused, allow me to try to explain. The people on the floor are trading in future contracts for Frozen Orange Juice (FCOJ). Future contracts are a deal between a seller and a buyer: "I promise to provide this commodity at this time as long as you promise to pay for it at this price." It doesn't matter if you don't have the commodity or even the money right then, as long as you provide it at the time. Before, the Dukes received a fake crop report that says that the winter damaged the orange harvest. They think that this will cause the price of orange juice to rise. However, Valentine and Winthorpe know that the harvest was unaffected, and that the price of OJ will go down. Here's what the Dukes' plan is: 1. Borrow money "on margin" from the stock exchange, with the promise to pay it back. 2. Buy a lot of future FCOJ contracts to drive the price up. 3. When the crop report is revealed, the price of FCOJ will skyrocket because of the lower supply and higher demand. 4. They then sell all the contracts they bought up at a higher price than they bought them for, earning a profit. Here's what actually happens: 1. The Dukes start to buy up contracts, driving the price up. The other brokers think that they're trying to corner the market and start buying as well. 2. Winthorpe and Valentine offer to sell future contracts, causing the other brokers to start buying from them and drive the price back down. 3. The crop report is revealed: the orange harvest is unaffected and the price of FCOJ plummets. Everyone who bought the contracts, including the Dukes, is now trying to sell them and "zero their position" so they don't lose all their money. 4. Winthorpe and Valentine start to buy back all the contracts that they previously sold to zero their position, earning a profit on each purchase due to the lower price; however, they are careful not to buy any from Wilson, since they want the Dukes to be holding the ball at the end of the day. 5. At the end of the trading, Winthorpe and Valentine have bought back all the contracts that they sold, and have made off like bandits. Meanwhile, the Dukes are left holding a bunch of now-worthless contracts. They are hit with a margin call—a demand to settle their debts to the stock exchange immediately—and because they don't have the money to pay back what they borrowed, they wind up bankrupt.