Matt Levine’s Money Stuff: Fake Cancer Doctor Insider Trading

Shoukat

Some insider trading hypotheticals. Let’s say you have cancer. A publicly traded biotech company has a promising drug in development to treat your cancer. It is conducting clinical trials of this drug. Your doctor suggests that you should try to sign up for the trial. You do. The drug works and your cancer is cured. The company has not yet released the results of the trial. You have a data point — your own experience — and you think the drug is great. You buy some short-dated out-of-the-money call options on the company’s stock. A week later, the company releases the trial ...