Not Everywhere Is Insider Trading
CFDs abroad, Vanguard advice, Dow tracking error and Metaplanet.
Here’s an insider trading hypothetical for you. I have a golf buddy who is a senior executive at a public company. One day on the course, she tells me: “My firm is going to announce a takeover of Anacott Steel at $15 per share; you should buy some.” I go back to my office, open up my brokerage app, and am about to buy 10,000 short-dated out-of-the-money call options when I think: “Wait, no, this is insider trading, I will get in trouble for this.” I close the app.
Instead, I pick up my phone and call you. “Hey,” I say, “I’ll bet you a million dollars that Anacott Steel closes above $13 this Friday.” You are a degenerate gambler and have never heard of the concept of adverse selection, so you say “ha, Anacott Steel is at $10 now, this is easy money, it’s a bet.” The next day, the takeover offer is announced, the stock goes to $14, and I collect $1 million from you.