Imagine sitting in an airplane when suddenly the door blows out. Now, while everyone is screaming and grasping for air, you instead turn on your noise-cancelling head-phones to ignore that crying baby next to you, calmly open your robin-hood app (or whatever broker you prefer, idc), and load up on Boeing puts. There is no way the market could've already priced that in, it is literally just happening. Would that be considered insider trading?

(Not my question, source https://www.reddit.com/r/wallstreetbets/comments/1935frs/is_it_insider_trading_if_i_bought_boeing_puts/ )

  • 40
    I like this question, it makes one think. What about any Boeing/SEC/Airline employees? Would it be insider trading for the flight attendant? What about for a crash investigator who happened to be on the flight? Or a Boeing VP with responsibility over safety?
    – Brian
    Commented Jan 10 at 18:56
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    @Brian Exactly the kind of variants you'd be asked about by appellate judges in oral arguments or by a law professor.
    – ohwilleke
    Commented Jan 10 at 23:19
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    I'm sure your trading activity would still trigger an insider trading investigation, and when you prove you were onboard the plane, they would close the investigation. Commented Jan 10 at 23:40
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    "There is no way the market could've already priced that in" Unless some of your fellow passengers beat you to the punch. Commented Jan 11 at 7:08
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    @pacoverflow and then open an investigation into potential sabotage?
    – Clumsy cat
    Commented Jan 11 at 9:20

3 Answers 3


Is it insider trading if I bought Boeing puts while I am inside the wrecked airplane?


Insider information is information obtained from an "insider" such as an executive or director of the company, or perhaps someone subject to a non-disclosure agreement with the company. Engaging in stock trading based upon confidential information from an insider source, before it is publicly disclosed, is illegal in most cases. See, e.g., here and here. From the first link:

SEC Rule 10b-5 prohibits corporate officers and directors or other insider employees from using confidential corporate information to reap a profit (or avoid a loss) by trading in the Company’s stock. This rule also prohibits “tipping” of confidential corporate information to third parties.

· Who is an insider?

An “insider” is an officer, director, 10% stockholder and anyone who possesses inside information because of his or her relationship with the Company or with an officer, director or principal stockholder of the Company. Rule 10b-5’s application goes considerably beyond just officers, directors and principal stockholders. This rule also covers any employee who has obtained material non-public corporate information, as well as any person who has received a “tip” from an Insider of the Company concerning information about the Company that is material and nonpublic, and trades (i.e. purchase or sells) the Company’s stock or other securities.

When you are not personally an insider, and you are relying on your own personal knowledge, you are not relying on knowledge from an "insider", so you are not engaged in insider trading.

It is also worth noting that Boeing is an aircraft manufacturer, not an airline. So, no one employed by the airline flying the plane would be an insider with respect to Boeing.

  • 118
    I mean, he is inside a Boeing, though maybe not for long.
    – bdb484
    Commented Jan 10 at 15:36
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    @bdb484 Ha ha. That comment is dad-joke class.
    – ohwilleke
    Commented Jan 10 at 20:51
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    @bdb484 that's why you have to get that trade out, quick. At least your heirs will have something to remember you by. Commented Jan 10 at 23:15
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    @Peter-ReinstateMonica "What if the pilot told you confidentially?": as this answer says, "Insider information is information obtained from an insider." If the pilot gives you information that isn't public and that the pilot can't use to make trading decisions about some company's stock, then you also can't use it to make trading decisions about that company's stock. (The question is about Boeing stock, not United stock.)
    – phoog
    Commented Jan 11 at 6:52
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    @ZizyArcher It seems inconceivable that the CEO of Boeing wouldn’t know something that’s not public knowledge and is relevant to share price movements after the accident.
    – Mike Scott
    Commented Jan 11 at 13:27

Matt Levine has answered this exact question in his yesterday’s Money Stuff column (archive.is link):

Nothing here is ever legal advice but this seems fine? Insider trading, I like to say, is not about fairness, it’s about theft. It’s illegal to trade on information that isn’t public and that you have some duty to keep secret. If you work for Boeing Co. and you put the bolts in wrong and trade on that information, that’s bad: You learned the nonpublic information in your job, and you had a duty to Boeing to use it only for the good of Boeing rather than trading on it. If you’re the pilot, don’t buy puts when the door flies off. (Land the plane!) But if you are just a regular person and you go to McDonald’s and buy a burger and say “this burger tastes bad, I’m gonna short the stock,” that’s fine, that’s legitimate research. If you log into Instagram and say “hey this app is good” and buy Meta stock, that’s good. People are supposed to go around observing companies’ products and services, evaluating them, and incorporating those evaluations into their investment decisions. That’s how stock prices become efficient and how capital gets allocated to good uses rather than bad ones.

Similarly if you’re on a plane and the door blows off and you think “this plane is poorly constructed, I’m gonna short some stocks here,” seems fine. What duty do you have to keep it confidential? Maybe there’s some fine print in your ticket contract but I doubt it. There are probably edge cases. What if you are flying for a work trip: Do you owe some obligation to your employer not to use the information to trade for your own account? Still probably not a huge enforcement priority to come after you.

  • "What duty do you have to keep it confidential?" I don't understand that question. As if no one else on the plane has realized the door has blown off? As if the whole world won't shortly know about it? Commented Jan 11 at 16:47
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    @pacoverflow That's a rhetorical question which is immediately answered with "NO". The author agrees with you that there is no duty to confidentiality
    – divibisan
    Commented Jan 11 at 17:04
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    Insider trading, I like to say, is not about fairness, it’s about theft. That seems off. Why does the SEC care about theft from a company? The SEC's remit is protecting stockholders and the market in general, not looking after the private interests of particular companies. If you steal cash from your employer and use it to buy stock, you've also profited illicitly from your employer. But it's not the SEC which is going to prosecute you. -- Is the "insider trading = theft" angle a widely held one, or is this just Matt Levine's personal hot-take?
    – R.M.
    Commented Jan 11 at 21:52
  • @pacoverflow: I think it's in the context of in the moment of the trade, to your trader - you're telling the stock exchange that you're shorting the stock, and then you happen to successfully short it because of an event happening to your knowledge that will lead to the stock shorting in short notice. But the knowledge isn't something you personally had a hand in. Commented Jan 11 at 22:00
  • 2
    @R.M. The word "theft" is definitely a poor choice in a legal discussion, since it has it's own specific definition. But colloquially, theft refers to stealing value from the person at the other side of the trade. E.g. I buy a share from you for $100 based on inside information. The price then goes up to $110 after the information becomes public. You should have benefited from the $10, not me. So, I've "stolen" $10 from you by buying the share at a time when it was illegal to do so.
    – JBentley
    Commented Jan 12 at 10:46

Interesting question! No, this is not illegal insider trading:


Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

As an ordinary passenger, you have no fiduciary duty or other relationship of trust and confidence to Boeing, so illegal insider trading isn't applicable to this case. (Unless there is something obscure in the fine print on an airline ticket, somehow burdening you with fiduciary responsibility.)

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