Insider Trading With Options

82 Pages Posted: 8 Nov 2023

Date Written: February 1, 2023


This paper examines employees' trading of own-company options. Using data from Finland, I show that employees' direct and indirect purchases of call options represent 4%-14% of aggregate retail option volume. These purchases contain price-relevant information: weekly returns on the underlying stocks are approximately 50 basis points. The informativeness is most evident before earnings announcements, extends to firms in the employer's supply chain, is not driven by industry knowledge, and disappears upon job separation. Consistent with prospect theory, employees who experience recent losses in their stock portfolios are more willing to exploit their information advantage by trading own-company options.

Keywords: Employees, insider trading, options

JEL Classification: G11, G14, M41

Suggested Citation

Vacca, Matteo, Insider Trading With Options (February 1, 2023). Available at SSRN: or

Matteo Vacca (Contact Author)

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101

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