Some of these guys just buy weekly options ahead of an earnings call, after a few hits it's basically screaming to some statistical algorithm at the SEC "hey, please put me in jail!". Digging up admissible evidence is harder, though.
The SEC could put them in a perfect "prisoner's dilemma" game and we're only talking about regular people, not hardened operators with like, a suicide capsule in their molar.
It seems wrong that my personal info is being given out by my brokerage, in a way that lets them identify my personal trades.
insiders are required to report their trades (search for "sec Edgar").
it is hard to make money knowing that a trade has taken place.. you need to know BEFORE and this is clearly illegal with very serious penalties (martha stewart served jail time...).
It’s just a matter of finding suspicious trades to start an investigation.
That said, the SEC does have access to the full dataset including the person/entity making the trades.
This is why their data analytical skills are so impressive.
As an example, according to the NYSE FIX Spec, this is 54 (Side) = 8 (Cross).
This is how they are able to "internalise", by crossing retail flow vs their house account.
CATNMS https://www.catnmsplan.com/ helps with this.
Also, the trades were done prior to CAT. I suspect it’s from Blue Sheets.
If you combine crosses with OATS you can still get some of the data you are looking for, just not as cleanly as with CAT.
you send your order to your broker/dealer, they send it to their OMS, which sends it to Citadel, who sends it to their internalisation engine..
All of these messages, including order Identifiers to create the linkages are sent to FINRA.
So your broker sends order "123ABC" to Citadel, FINRA gets this and can trace your order back up and down the "stack" however they want.
Unlikely.
More likely is that the brokerages and/or exchanges submit transactional order-book trade data to the SEC (i.e. anonymous numbers .... timestamps, quantity traded, direction).
If the SEC then spot something, its just a case of picking up the phone to the brokerage and asking to ID the client for the transaction at a given timestamp.
Most exchanges require the client details to be sent to them (encrypted) so the regulators can see who is behind the orders on a real-time basis.
Canada for example is behind the times here, but has a program to address this : https://www.iiroc.ca/members/client-identifiers
If you are a corporation, you are required to provide your "Legal Entity Identifier (LEI)"
If you are a retail client, your account number is sent.
Broker/dealers send order data to the regulators daily.
It isnt 'wrong', you agreed to this when you opened your account,and the broker/dealers are REQUIRED to provide this as it is a "market rule".
EDIT : replace "trade" with "order"...
Obviously working for the company in question makes it different, but this doesn't seem crazy or unusual.
I've worked placed where it was very easy to predict the stock movements ahead of earnings call since the company's success/failure is in public eye a lot (same true for netflix?).
The top 5 companies in terms of market cap get lots of attention and analysis. I bet most people could review that data before the earnings call and guess the movement of the stock enough to make money.
Again, i would never touch my companies stock on the market but it doesn't seem like you need insider knowledge at a lot of big companies.
Well, as you said, not everything is a win, and sometimes you lose. Some people don't have the money to deal with options and handle a loss.
But who said i wasn't a millionaire ;)
If "most people" could do this, "most people" would.
I think the issue is not that most people can't "guess" the outcome, its that they can't afford (in the short term) the money to invest. Many people take years into their career before they can significantly invest and save money. Especially true for people who can afford the risk of options trading, which is more risky than "buy and hold" investing.
The article in question mentions netflix engineers who make large 6 figure salaries. They could probably afford to make well educated bets on many other stocks and profit handsomely after several years.
> Birinyi Associates studied Apple’s post-earnings stock behavior since 2009. It found Apple stock has gapped up, or shot higher 65 percent of the time in after-hours trading, right after its earnings report, with an average pop of 4.7 percent. On the next day, whether it gapped up or down, it has traded lower 65 percent of the time for a 0.92 percent decline.
[1] https://www.cnbc.com/2018/05/01/heres-how-apples-stock-usual...
Practically speaking, this isn't that easy. Most people don't have hundreds lying around to invest, especially not in risky trades.
Also, options (what is being discussed) are often a lot more than $100 - Eg. Opening Robinhood rn shows me AAPL options around 150 whhile GOOGL options are 2k+ while AMZN is 3k+. Even if someone is very confident in a stock movement (and realistically, its obviously not guaranteed), thats a lot of money for the average person, especially when they could lose it. You have to be somewhhat well-off to stomach multi-thousand dollar losses - especially at the start.
(also earnings are 1 per quarter)
There are entire firms trying to squeak pennies per share out of the market. To think that some backlog of data that most people could plainly interpret would lead to a pop after earnings is very difficult to believe.
People with insider trading knowledge don't seem able to accurately predict the exact price, but they know if its good/bad/great news and how wall street reacts to that .
I'd like to see what someone ends up with investing a more meager amount, like 1k. That's likely what a lot of young adults have in savings they could potentially invest.