Blackout Period
A blackout period is a restricted trading window when company insiders are prohibited from trading company stock, typically before earnings announcements or other material events, to prevent trading on material non-public information.
The Trader's Take
The Signal
Blackout periods create predictable patterns in insider trading. The absence of trades during blackout periods is normal, while trades that occur during blackouts can raise red flags.
The Noise
The lack of insider trades during blackout periods is expected and doesn't indicate anything about company prospects.
Actionable Insights
- 1Understand that insider trading activity naturally decreases during blackout periods.
- 2Trades that occur during blackout periods may be via 10b5-1 plans, which are allowed.
- 3The end of a blackout period often sees increased insider trading activity.
- 4Blackout periods typically occur before earnings announcements and major corporate events.
Regulatory Context & Context
Common Misconceptions
Blackout periods aren't required by SEC regulation—they're company policies to prevent violations.
10b5-1 plan trades can still occur during blackout periods since they're pre-planned.
Blackout periods vary by company and may not be publicly disclosed.
Frequently Asked Questions
When do blackout periods typically occur?
Blackout periods typically occur before earnings announcements, major corporate events, or other times when insiders might possess material non-public information.
Can insiders trade during blackout periods?
Generally no, except through pre-arranged 10b5-1 trading plans that were established before the blackout period began.