Is it insider trading if I bought Boeing puts while inside the wrecked airplane?
A viral hypothetical about buying Boeing put options while sitting in a damaged Boeing jet prompts a broader look at what legally counts as insider trading. Commenters explain that, in U.S. law, liability generally hinges on trading on “material non‑public information” obtained through a fiduciary or confidential relationship, so a random passenger reacting to an accident they directly experienced is likely in the clear. The thread contrasts this with edge cases (employees, air traffic controllers, overheard conversations, different jurisdictions) and debates whether insider trading rules are coherent or fair in practice.
Scenario and Overall Takeaway
- Hypothetical from a meme post: passenger on a Boeing whose door blows off buys Boeing puts mid‑incident.
- Broad consensus: in that scenario, for an ordinary passenger, it is not insider trading; they are just first to act on a publicly observable event.
What Counts as Insider Trading
- Core idea: illegal trading generally requires using material, non‑public information obtained through a breach of fiduciary duty or confidentiality, or via misappropriation.
- Merely experiencing a product or event “in the wild” (bad burger, defective car, airplane incident) is treated as legitimate research, not inside info.
- Several comments stress that you can be liable even as a non‑employee if you trade on confidential information tipped by someone who does owe such a duty.
Public vs Non‑Public Information
- Debate over what “public” means:
- Some argue once an event is observable by passengers or people with scanners (ATC radio), it’s effectively public.
- Others note gray areas: leaks to small audiences, overheard conversations, or limited distribution newsletters.
- Examples raised: overheard M&A slides on a plane, coffee‑shop discussions, newsletters with few subscribers, and leaked earnings screens.
Edge Cases and Roles
- Questions about air traffic controllers, flight crew, maintenance staff, EMTs, journalists, and CEOs on the flight.
- Many note employers’ own stricter policies (blackout windows, bans on options) that go beyond legal minima.
- Some scenarios would clearly be illegal for insiders but legal for unrelated third parties (e.g., hedge funds using credit card or satellite data).
Jurisdictional Differences
- Comments highlight that definitions differ:
- US: emphasis on breach of duty or relationship of trust.
- EU/UK/Australia: often broader; sometimes any trading on market‑sensitive non‑public info is prohibited, even without a company relationship.
- Specific UK test mentioned: specificity, materiality, and non‑public status, with “public” sometimes tied to how many people know.
Ethics and Fairness Debate
- One camp calls insider trading “victimless” and efficiency‑enhancing; another compares it to selling a house while concealing known defects.
- Frustration over perceived double standards: legislators and powerful insiders seemingly trade with impunity while others are prosecuted.
Meta and Cultural Notes
- Thread notes the question’s origin in WallStreetBets and treats it partly as a meme.
- Several joke about wordplay (“inside” the plane), arbitrage bots watching ADS‑B data, and fictional depictions (e.g., Bond, TV shows).