Your questions are vague & not precise. From what I understood, an insider can profit (Or avoid potential losses if he holds shares in the company) based on his prior knowledge of non-public information. If you (if classified as an insider) know that the share price will drop and acted upon it, most probably you will get caught, since you will have to file to sell shares and your transactions must be disclosed. Again, if you decided to buy put options to profit from the stock decline (And you are classified as an insider), then you will also be caught. Cases get more complicated when a person classified as an insider sends out a tip to someone else (Who is not related to the company) that the stock price will potentially decline in the next 4 months. This person, can go out in the market and buy put options and make a killing. However, again, suspicious activity (in the stock or in the options market) catch the attention of many (including the regulators) and they might consider investigating such activity to ensure that the person who made a killing was not truly acting on insider information tips sent to him from someone inside the company. Conclusion is, illegal insider trading happens all the time, however, almost 80% of insider trading happens according to the regulations and has nothing wrong with them (Based on the current regulations). It's always said that insiders sell their company stock for many reasons (Not only because they know that the stock price will go down), however, insiders buy their company stock for only 2 reasons (More control of the voting power or because they are pretty sure that the stock price will increase in the long term).