So I will comment on the one example that I can speak somewhat fluently on, which is Thought experiment #2.
In the modern economy, hedges are publicly traded as well as the stocks. It is impossible for one to rise in value without the other falling, simply because information is public. If the executive begins to buy huge hedges against his corporations stock, the value of the hedge will rise.
Even if no one knows who exactly is buying these hedges, the price is going up, and so people will either begin to buy hedges as well, thus reducing the gain on them, or they will sell the stock, lowering its price and reducing the gain on the hedge.
Also, buying hedges based on private information would also be insider trading....at least in the US.
So I will comment on the one example that I can speak somewhat fluently on, which is Thought experiment #2.
In the modern economy, hedges are publicly traded as well as the stocks. It is impossible for one to rise in value without the other falling, simply because information is public. If the executive begins to buy huge hedges against his corporations stock, the value of the hedge will rise.
Even if no one knows who exactly is buying these hedges, the price is going up, and so people will either begin to buy hedges as well, thus reducing the gain on them, or they will sell the stock, lowering its price and reducing the gain on the hedge.
Also, buying hedges based on private information would also be insider trading....at least in the US.