Would you short your own company?

New Ab44
Aug 19 28 Comments

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

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TOP 28 Comments
  • BYTON cJKu57
    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.
    Aug 19 5
    • Microsoft
      Tier 1

      Microsoft

      BIO
      #1 in Prestige
      Tier 1more
      Short selling your employer, or better yet buying puts, isn’t typically insider trading, it’s called being prudent and hedging your risks.
      Aug 19
    • BYTON cJKu57
      Sorry I assumed OP meant selling. Not sure when stocks are low. but it can also apply to buying.
      Aug 19
    • New Ab44
      OP
      no not selling the stock you have, still holding them(or selling in the window), but doing extra trading because the market is weak. Amazon is another good example of that the last year. basically sideways compared to MSFT or TWTR
      Aug 19
    • Microsoft
      Tier 1

      Microsoft

      BIO
      #1 in Prestige
      Tier 1more
      Oh I would never recommend trading your employers stock specifically because of your feelings on the company’s future.

      Hedging, sure, if you are prepared to show the feds that it was indeed hedging and that you consistently did the same thing.
      Aug 19
    • Amazon / Eng
      tt10

      Amazon Eng

      BIO
      Hmm
      tt10more
      At many places, buying derivative (puts) on your company stock is not allowed, they kind of provide insane margins, esp with insider knowledge. Shorting is still essentially selling your company stock, comes under same insider trading rules.

      This assuming insider trading rules apply to you.
      Aug 19
  • WeWork RPvk36
    Yes
    Aug 19 0
  • Qualcomm NqAf57
    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.
    Aug 19 3
    • New Ab44
      OP
      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
      Aug 19
    • Yes this is true, you cannot trade options in your company
      Aug 19
    • Amazon / Eng
      tt10

      Amazon Eng

      BIO
      Hmm
      tt10more
      Options provide insane returns on your investment if you made right call. If someone had insider info, options would act as multiplier on your returns.
      Amazon too explicitly disallow derivatives for this reason.
      Aug 19
  • Micron / Finance muun
    I've done it. It's no different than buying stock from an insider perspective.
    Aug 19 3
    • New
      mPOT57

      New

      PRE
      Salesforce
      mPOT57more
      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.
      Aug 19
    • Micron / Finance muun
      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.
      Aug 19
    • New
      mPOT57

      New

      PRE
      Salesforce
      mPOT57more
      Many companies designate everybody as an insider. I’m with Amazon now, and that’s how it seems here, too. I am an insider.
      Aug 19
  • Rubrik setmeflee
    if you think your company worth of short, why not just leave. You can do whatever after.
    Aug 19 1
    • Qualcomm NqAf57
      Only if you are not trading based on insider information. If you are, you're probably even more likely to be audited or at least scrutinised.
      Aug 19
  • Synopsys oFEJ36
    If you also continue to hold a long position, the simultaneous short will have nasty consequences on the holding period computations for tax treatment.
    Aug 19 1
  • Google / Eng Bluths
    You can’t do that at Google.
    Aug 19 1
    • New Ab44
      OP
      How would they ever find out ?

      But sure, IF they did not worth the risk.
      Aug 19
  • Nebbiolo Technologies / Design
    lyJi05

    Nebbiolo Technologies Design

    PRE
    500 Startups
    lyJi05more
    Buy puts instead. Consider that insurance.
    Aug 19 0
  • Facebook
    catsmeow

    Facebook

    BIO
    .
    catsmeowmore
    "Would you be willing to make money on the stock market?"

    Thanks for this interesting and thought provoking question.
    Aug 19 0
  • 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
    Aug 19 0
  • Atlassian / Eng
    Luffy, M.D

    Atlassian Eng

    PRE
    Facebook
    BIO
    A prematurely grumpy somewhat old man
    Luffy, M.Dmore
    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.
    Aug 19 0
  • Uber qzIk30
    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.
    Aug 19 0
  • Amazon / Product
    wewewewe

    Amazon Product

    PRE
    Amazon, Goldman Sachs
    wewewewemore
    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
    Aug 19 0
  • Oscar 🐨koala
    Has there been arrest for a 200k short?
    Aug 19 0