The magician places three Styrofoam cups and a big, sharp, nasty-looking, rusty nail on a table. While the magician's back is turned, a spectator stands the nail up beneath one of the cups. The magician then turns around and smashes two of the cups with a hand, knowing that a wrong choice means a hand impaled on a nail. Fortunately, the magician's incredible psychic powers keep disaster at bay.
Before reading about this trick, realize that it is incredibly dangerous; can lead to massive injury, disfigurement, and death; is a pointless display of bravado; can traumatize innocent people; should not be performed by anyone; must be kept out of reach of children; has been linked to cancer in laboratory mice; and is only in the repertoire of magicians who are suicidal, bulletproof, or complete morons. Now, here's how those who perform this effect anyway (either because they value good show over their own safety or can't read) go about it.
There are three levels of this effect.
The basic level is also the safest. For this version of the effect, the magician places the pointy nail beneath the cups without any assistance. A spectator then mixes up the cups (ala the shell game) while the magician watches to make sure nothing tricky is done. The magician then smashes the two safe cups to show that the dangerous cup was not lost in the shuffle. The safe cups are easy for the magician to locate in that they are the white ones and the cup with the nail in it is red. Although this effect can be startling if performed well, the secret is sometimes puzzled out by an observant spectator.
The second level uses three while cups and spectator nail placement, but keeps the magician out of danger. In this variation, the cups are not smashed with the magician's hand, but with a hamster, squirrel, or other small animal. The magician knows where the nail is by observing the animal -- small animals will naturally be annoyed by (and therefore wiggle their nose at) the smell of a piece of rusty metal. So long as a very rusty nail is used, the magician is home free. And even if a mistake is made, at least no people were harmed.
This version of the trick is only seldom performed because certain advocacy groups have somehow gotten it into their mind that a striking feat of mentalism is not worth risking the life of an animal, and therefore they may protest, prosecute, or violently attack the magician.
The third level of this effect is that described under "Effect" above. No gimmicked cups or nails are used. No animals or other surrogates are employed. The magician's own hand is used to smash the cups.
It turns out that there are many ways to discover which cup has the nail under it. For example, if the nail is taller than the cup, then the cup that isn't quite sitting on the table is the one with the nail under it. Or the magician might invite the spectator who placed the nail (or, even better, one of that spectator's loved ones) to smash a certain cup. If the spectator flinches, resists, or says something along the lines of, "My dear God, no!" then you known you've located the cup with the nail. A cup with a nail in it has a higher specific gravity than one without a nail, and water from a cup with a nail in it will probably taste bad. With a little thought, you will see that there are many such methods for the magician to avoid smashing a hand down on an upturned nail and possibly contracting lockjaw, rabies, leprosy, chronic bloody hangnails, or worse.
But none of this is relevant because the magician doesn't really care where the nail is. In fact, there are nails under all three cups.
Before the performance, the magician pokes the pointy ends of three nails half way into the inside bottoms of three inverted Styrofoam cups, causing them to stick to the cups even if the cups are lifted. When the spectator puts a nail under a cup, the result is actually a cup with two nails in it.
While the trap is being set, the magician's back is turned. This gives the magician ample time to palm a fifty-cent piece covered in flesh-colored cloth. When the time comes to crush two cups, the magician slams the hidden coin down on the exact, precise center of the hidden nail with enough force to drive it into and through the table, effectively making it vanish beneath the smashed cup. It is important to note that if the magician's aim is even slightly off, a massive puncture wound or shards of metal flying into the audience are possible, followed by a quick call for paramedics and months of financially draining lawsuits.
The remaining cup is then shown to have a nail under it, various people faint, and the magician's life and health insurance is summarily canceled.
Remember, if you perform, practice performing, consider performing, or watch someone else perform this trick, you are an idiot. Just thought we'd remind you.
Note: This effect is quite old and famous. In fact, there is a popular story told among magicians of a magic student who didn't believe that anyone ever performed Russian Roulette, and would not accept the fact that it really could be performed until he actually touched a puncture wound in his master's hand.