Insider trading with options: Evidence from rank-and-file employees

Using trading data from Finland, I document that some rank-and-file employees purchase options written on their employers’ stocks. These purchases are associated with subsequent weekly excess returns of approximately 60 basis points in the underlying stocks. The association is most pronounced before earnings announcements, extends to firms in the employer’s supply chain, is not explained by industry knowledge or trading skill, and weakens upon job separation. The results suggest that some rank-and-file employees attempt to exploit informational advantages by trading in the option market, raising questions about firms’ disclosure policies and the alignment of employee incentives with market efficiency.

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Publication Details

Journal
Journal of Corporate Finance
Published
2026-01-22
DOI
https://doi.org/10.1016/j.jcorpfin.2026.102963
Primary Topic
Auditing, Earnings Management, Governance
Type
article
Field-Weighted Citation Impact
0.00
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article

Insider trading with options: Evidence from rank-and-file employees

Matteo Vacca
Journal of Corporate Finance
Auditing, Earnings Management, Governance
article

Insider trading with options: Evidence from rank-and-file employees

Matteo Vacca
article en

Abstract

Using trading data from Finland, I document that some rank-and-file employees purchase options written on their employers’ stocks. These purchases are associated with subsequent weekly excess returns of approximately 60 basis points in the underlying stocks. The association is most pronounced before earnings announcements, extends to firms in the employer’s supply chain, is not explained by industry knowledge or trading skill, and weakens upon job separation. The results suggest that some rank-and-file employees attempt to exploit informational advantages by trading in the option market, raising questions about firms’ disclosure policies and the alignment of employee incentives with market efficiency.

Journal of Corporate FinanceVol. 98
Hanken School of Economics (FI)
Decent work and economic growth
Openalex Percentile: Top 82%
Auditing, Earnings Management, Governance
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