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Would you short your own company if it performs badly on the market, but still like your job and salary? Since some also get stocks, it can be seen as a good hedge trade. Is there any insider trading considerations here if you are just a developer? UBER is a good exampe recently
Has there been arrest for a 200k short?
I've done it. It's no different than buying stock from an insider perspective.
This is generally not allowed. Most companies will designate you as an insider, which prohibits you from short selling the company by company policy and even arguably by law.
I use Puts, so it's not exactly short selling but basically the same result. My company has an "insider" list which includes certain directors, VP's, finance people, etc. Certainly not everyone in the company is an insider. I do avoid trading if we're close to reporting earnings. I do it only for longer term trends and/or to hedge.
Many tech companies have policies that prevent trading of any form of derivative of their stock while you're employed at the company; Qualcomm certainly does. Your job will be terminated if you're caught, and I won't take that risk.
Oh interesting, never seen references to such rules before! What are their arguments though? Wouldn't it actually be, from a rational economic interst, better to have a more transparent price discovery and sometimes admit that your company(looking at you BYND :D ) actually might be overvalued/speculated on while still being a good one
Yes this is true, you cannot trade options in your company
You can’t do that at Google.
How would they ever find out ? But sure, IF they did not worth the risk.
If you also continue to hold a long position, the simultaneous short will have nasty consequences on the holding period computations for tax treatment.
https://www.fidelity.com/learning-center/investment-products/options/options-strategy-guide/covered-straddle Note that options transactions are usually still against companies insider trading policies
In some instances, you can buy put options to protect your positions (not allowed in Amazon). Another option is to buy put options on SPY or QQQ ETFs to protect total market downside
Insider trading charges (it's criminal not just civil) are way worse than losing some $$ on company stock. You can hedge by buying bonds, puts on the broad market (eg SPY), etc.
What the law qualifies as insider trading is a good bit looser than most companies' policies. Remember, they set the policies to protect the company not the employee Shorting has essentially unlimited downside, so it's probably safer to pick other hedges. The one time I'd be tempted would be if I had ISO shares that were firmly mine but I was stuck behind the usual 6 month (or occasionally 9-12 month) lockup. Something like the covered straddle options trade I mentioned above might be good for locking in the price. It's not like employee lockup expiry (when shares very often go down) is material non-public information as that expiry is usually in public filings and literally every IPO done by the major ibanks requires it.
Insider trading has so many definitions, this isn't something to screw around with. Most companies ban employees from shorting them too. Arrested and fired? No thanks
Insider trading isn't an after thought. It would be the main issue here. Talk with the HR or right finance people at ur company. They will generally have open close windows when u can sell stocks.
Short selling your employer, or better yet buying puts, isn’t typically insider trading, it’s called being prudent and hedging your risks.
Sorry I assumed OP meant selling. Not sure when stocks are low. but it can also apply to buying.