What to do when you have access to inside news?
- Thread starter qll
- Start date
Trade futures, there is no such thing as
"INSIDE INFO"
Accepting the risk someone is trying to lay off in the mkt is open to all takers.
Just another reason to trade the stock index futures instead of individual companies, you sidestep all the accounting, etc games being played.
Good Luck, lets make some money this week.
"INSIDE INFO"
Accepting the risk someone is trying to lay off in the mkt is open to all takers.
Just another reason to trade the stock index futures instead of individual companies, you sidestep all the accounting, etc games being played.
Good Luck, lets make some money this week.
very interesting. you made some good points. can i conclude those:
1 insider trading will only be fined, but no jail time, as long as there is no lie in court?
2 i don't understand why buying stocks using inside info from a stock picker is illegal. can you give some reference on this case?
i have a final question, what will SEC do if a red flag is raised for inside trading? freezing account? interview the trader? interview company executives?
I've received a couple of pieces of inside information over the years. One was that the UK mobile phone operator MMO2 was facing severe cashflow difficulties as a result of operating losses in its German and Belgian units, and they were about to breach their banking covenants. The stock was in the 35p area at the time. The bottom came shortly after, and it later went up to around 200p.
The second one was that a hot European telecoms consultancy was about to be bought by a US firm for about 800 million. This was during the dotcom era, where such news would have been seen as very bullish. The acquirer's stock subsequently tanked over 90% in the next 2 years.
In the cases where news came as a surprise, most of the time it's appeared that the majority of the potential profit was achievable *after* the market had opened and the news was out. The gap down on the first day of trading after September 11th 2001 was far less than the collapse from that opening price to the close at the end of the week. When Refco released its accounting restatement news, the gap down (untradeable for most) was far less than the subsequent collapse (tradeable by any retail punter).
So - if there is inside news, be careful. Quite apart from the legal concerns, the market may well go massively far in the opposite direction. Or if the market does end up following the news, you will have ample opportunity for profit *after* is it released - much more so in most cases than you will by trading ahead of time.
The second one was that a hot European telecoms consultancy was about to be bought by a US firm for about 800 million. This was during the dotcom era, where such news would have been seen as very bullish. The acquirer's stock subsequently tanked over 90% in the next 2 years.
In the cases where news came as a surprise, most of the time it's appeared that the majority of the potential profit was achievable *after* the market had opened and the news was out. The gap down on the first day of trading after September 11th 2001 was far less than the collapse from that opening price to the close at the end of the week. When Refco released its accounting restatement news, the gap down (untradeable for most) was far less than the subsequent collapse (tradeable by any retail punter).
So - if there is inside news, be careful. Quite apart from the legal concerns, the market may well go massively far in the opposite direction. Or if the market does end up following the news, you will have ample opportunity for profit *after* is it released - much more so in most cases than you will by trading ahead of time.
F me! Just spit out my beer...
LOL