5 ms·

I don't know about your company, but where I work shorting my employer's stock is explicitly against company stock policy. It really does make sense though, you

by bdonlan 14y ago

I don't know about your company, but where I work shorting my employer's stock is explicitly against company stock policy. It really does make sense though, you don't want allegations of insider trading going around when employees start shorting stock...

nandemo 14y ago
In Japan it's actually illegal. Your broker won't even let you do it.
- Retric 14y ago
  That seems extreme. If I have the option to buy shares in 6 months at price X and the stock is worth X + 10 then buying the option to sell at X + 5 in six months is simply managing risk. It's a good hedge regardless of what I think is going to happen to the company.
  - nandemo 14y ago
    That might make sense, but perhaps the securities agency considers that preventing insider trading and market manipulation outweighs letting employees hedge their companies' stock. Besides, in Japanese companies non-execs typically don't get stock options anyway.
ChuckMcM 14y ago
Oh it absolutely was against policy to short your own stock for just those reasons. At the time I had a restricted stock grant (pre-owned but you 'vest' over time) and ISO options, also vesting. If I had a been a bit more clever I could have sold a 'put' option on all those shares. Not worth as much as actually selling the shares would have been of course. But really there are two points here: 1) People with a lot of equity in a single company will sell it when they can to diversify their risk (not evil) 2) People who end up with a lot of equity in a single company that is worth a lot of money are 'lucky' not necessarily 'good', 'smart', or 'evil.' I certainly felt it raised eye brows when Pincus and other officers dumped big chunks of stock in a pre-arranged sale, but note that had Zynga continued to go up in value nobody would have blinked, but since it so spectacularly has crashed they are reviled. As bad as that looked I felt the Groupon folks turning down Google's $6B offer and instead selling their own stock through a private placement was a lot further down the scale toward 'poor judgement' than Zynga's moves.
- 727374 14y ago
  Selling a put is a long position. If you meant buying a put, I'd assume that's against policy too. Or else that's a really simple loophole. I totally agree with point #1 though. People should be able to diversify their risk.
  - trhtrsh 14y ago
    Yeah, any sort of trading instructions, even a binding instruction like "Sell my shares a year from today, when I won't be under lock up", is considered suspect for insider trading. A 10b-5 plan or similar is the only legally safe way to act during a quiet period. But trading during a post-IPO employee lockup, when there is no insider information concern, maybe isn't as tight as "the week before earnings release". Seems like it shouldn't be legally. But employers certainly would order their employees not to trade. There was a nasty loophole/scandal a few years back where people would set up a legal auto-sale plan like "Sell 1000 shares every week", and selectively cancel the plan on weeks they didn't want to transact. I'm not sure what became of that.
  - bdonlan 14y ago
    Actually, writing (selling) a put is the short position. Buying is the long position; you profit if the value of the put goes up (which happens when the value of the underlying stock goes down or is expected to go down).

by bdonlan 14y ago

nandemo 14y ago

In Japan it's actually illegal. Your broker won't even let you do it.

Retric 14y ago
That seems extreme. If I have the option to buy shares in 6 months at price X and the stock is worth X + 10 then buying the option to sell at X + 5 in six months is simply managing risk. It's a good hedge regardless of what I think is going to happen to the company.
- nandemo 14y ago
  That might make sense, but perhaps the securities agency considers that preventing insider trading and market manipulation outweighs letting employees hedge their companies' stock. Besides, in Japanese companies non-execs typically don't get stock options anyway.

ChuckMcM 14y ago

Oh it absolutely was against policy to short your own stock for just those reasons. At the time I had a restricted stock grant (pre-owned but you 'vest' over time) and ISO options, also vesting. If I had a been a bit more clever I could have sold a 'put' option on all those shares. Not worth as much as actually selling the shares would have been of course. But really there are two points here: 1) People with a lot of equity in a single company will sell it when they can to diversify their risk (not evil) 2) People who end up with a lot of equity in a single company that is worth a lot of money are 'lucky' not necessarily 'good', 'smart', or 'evil.' I certainly felt it raised eye brows when Pincus and other officers dumped big chunks of stock in a pre-arranged sale, but note that had Zynga continued to go up in value nobody would have blinked, but since it so spectacularly has crashed they are reviled. As bad as that looked I felt the Groupon folks turning down Google's $6B offer and instead selling their own stock through a private placement was a lot further down the scale toward 'poor judgement' than Zynga's moves.

727374 14y ago
Selling a put is a long position. If you meant buying a put, I'd assume that's against policy too. Or else that's a really simple loophole. I totally agree with point #1 though. People should be able to diversify their risk.
- trhtrsh 14y ago
  Yeah, any sort of trading instructions, even a binding instruction like "Sell my shares a year from today, when I won't be under lock up", is considered suspect for insider trading. A 10b-5 plan or similar is the only legally safe way to act during a quiet period. But trading during a post-IPO employee lockup, when there is no insider information concern, maybe isn't as tight as "the week before earnings release". Seems like it shouldn't be legally. But employers certainly would order their employees not to trade. There was a nasty loophole/scandal a few years back where people would set up a legal auto-sale plan like "Sell 1000 shares every week", and selectively cancel the plan on weeks they didn't want to transact. I'm not sure what became of that.
- bdonlan 14y ago
  Actually, writing (selling) a put is the short position. Buying is the long position; you profit if the value of the put goes up (which happens when the value of the underlying stock goes down or is expected to go down).