Blackout Period

What it means

A blackout period is a specific window of time when employees are banned from trading their company shares. Companies do this to make sure no one is using private information to make money before the public knows the news.

These periods often happen right before the company reports its quarterly earnings (official financial updates). During this time, the stock market is essentially closed to you, even if you own the shares yourself.

A simple example

Imagine Sarah works at a big company. The company is about to announce its profit for the last three months. To be safe, the company starts a blackout period on June 1st. Even though Sarah has 100 shares of stock worth $10 each, she cannot sell them. She must wait until the company announces its news and officially ends the blackout period.

Why it matters to you

• You cannot sell your shares to raise cash during these times, even if you really need the money.
• If you have an automatic plan called a 10b5-1 plan, you might be able to sell shares during this time because the sale was set up long ago.
• It forces you to wait until the company releases its financial results to trade.

Common mistakes to avoid

• Do not try to trade company stock during a blackout period, even if you think you have secret information.
• Do not assume your trading window is always open; check your company handbook or ask your HR team.

Words used on this page

• Earnings: The official report of how much money a company made during a set time.
• 10b5-1 plan: A legal agreement made in advance to sell stock on specific dates, which helps avoid breaking rules about private information.
• Trading: The act of buying or selling company stock.