Amazon Trading Windows Explained
As an Amazon employee with restricted stock units (RSUs) or stock options, you've likely heard about the company’s trading windows. These windows restrict when you can sell your vested shares, which can complicate your finances if you don’t plan carefully. Here’s what you need to know.
Key Takeaways
Amazon trading windows determine when certain employees can buy and sell company stock.
Trading restrictions apply to RSU sales, stock purchases, option exercises, and even changes to your tax withholding elections
These restrictions are designed to prevent insider trading.
Violating Amazon’s trading window policies can result in losing your job and potential insider trading charges.
What Are Amazon Trading Windows?
Trading windows are periods when certain Amazon employees are permitted to trade company stock. Conversely, blackout periods are times when trading is prohibited. These windows are designed to prevent employees with non-public information from accidentally (or intentionally) violating insider trading policies. For employees who are bound by these trading windows, the restrictions can apply to:
RSU sales
Stock purchases
Option exercises
Changes to your tax withholding elections
Who Is Subject to Trading Windows?
Not every Amazon employee is subject to these trading restrictions. The rules will vary based on your access to sensitive information. At Amazon, you're more likely to be subject to trading windows if you:
Hold a senior leadership position (L7 and above)
Work in finance, accounting, or investor relations
Have access to financial data, earnings information, or strategic plans
Work in roles involving mergers, acquisitions, or major partnerships
Are in compliance, legal, or security functions
Amazon will notify you during onboarding or role changes if you're subject to trading restrictions. When in doubt, check with your manager or HR representative.
How Amazon Trading Windows Work
Amazon's trading windows typically follow the pattern below.
Open Windows
This period usually begins two to three days after quarterly earnings are announced and lasts approximately six to eight weeks. During this time, eligible employees can:
Sell vested RSUs
Exercise stock options
Purchase additional Amazon shares
Change tax withholding elections
Modify or establish 10b5-1 trading plans
Blackout Periods
Blackout periods begin two to three weeks before the end of each fiscal quarter and continue until Amazon’s earnings are announced. During blackouts, all trading in Amazon stock is prohibited for certain employees. This includes selling off vested RSU shares. However, existing 10b5-1 plans may continue to be executed. (More on this below.)
In addition to the ban on trading stock, restricted employees cannot change their RSU tax elections during blackout periods.
Special Blackout Periods
Beyond regular quarterly blackouts, Amazon may impose "ad hoc" or special blackout periods during:
Merger and acquisition discussions
Major product launches or announcements
Regulatory investigations
Significant partnerships or strategic initiatives
…or other significant events that haven’t been made public yet.
What Transactions Are Restricted During a Blackout Period?
Even many employees who are familiar with Amazon’s trading windows don’t realize how broad the restrictions truly are.
1. Stock Transactions
All direct transactions involving Amazon shares are prohibited during blackout periods, including:
Buying or selling Amazon shares in the open market
Exercising stock options (unless through a pre-approved 10b5-1 plan)
Gifting Amazon shares to family members
Pledging Amazon stock as collateral for loans
2. RSU-Related Activities
In addition to trading stocks, RSU administrative changes are also restricted during blackouts. This includes:
Changing your tax withholding election (sell-to-cover percentage)
Modifying how vested shares are handled
Making any elections that affect future RSU vesting
3. Derivative Transactions
Complex trading strategies and financial instruments related to Amazon stock are also prohibited, such as:
Trading options on Amazon stock
Short selling Amazon shares
Any hedging strategies involving Amazon securities
4. Family Member Actions
Trading restrictions typically extend to your household members, including:
Spouses and domestic partners
Dependent children
Anyone living in your household
Entities you control (trusts, corporations, etc.)
The High Cost of Violations
Amazon takes trading window violations very seriously, and the consequences can be severe. Employees who disregard blackout period restrictions may face immediate termination for cause. They may also:
Forfeit all unvested equity compensation
Lose all severance benefits
Be permanently banned from future employment at Amazon
In rare cases, employees may also face legal consequences. Even unintentional violations can result in:
SEC investigations and civil penalties
Criminal charges for insider trading
Disgorgement of all profits plus interest
Permanent ban from serving as an officer or director of public companies
In 2021, Viky Bohra was sentenced to 26 months in prison for securities fraud after using Amazon inside information obtained from his wife to make $1.4 million in illegal trades during blackout periods. The family paid over $2.6 million in disgorgement, interest, and penalties.
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Strategies for Managing Trading Window Restrictions
While Amazon’s trading windows can limit your financial options, you can take steps to manage these restrictions.
Know Your Status and Stay Informed
Understanding your personal restrictions and staying up-to-date with policies is essential. First, confirm whether you're subject to Amazon’s trading windows. If you are, look into the rules for blackout periods and keep track of trading window calendars.
Plan Ahead for Tax Obligations
One of the biggest challenges Amazon employees face is the large tax bills from RSU vesting, especially in years three and four, when 40% of your initial grant vests each year. The default sell-to-cover rate is 22%, but depending on your income level, that may not be enough to cover your tax bill. To avoid this problem:
Calculate your projected tax liability for upcoming RSU vests.
Adjust your sell-to-cover percentage during open trading windows.
Set aside cash reserves to cover tax obligations if you can't sell during vesting.
Diversify Your Portfolio
Holding too much Amazon stock creates a risk of over-concentration in your portfolio. To plan your diversification strategy around trading windows:
Develop a target allocation for Amazon stock (typically 5%–15% of total investments).
Create a multi-year plan to gradually reduce concentration.
Time major sales during open trading windows.
Consider the tax implications of timing for your sales.
Maintain an Emergency Fund
Since you can't always access your Amazon stock when needed, maintain adequate emergency reserves. To do this:
Keep 6–12 months of expenses in cash or liquid investments.
Use taxable investment accounts for intermediate-term goals.
Avoid relying on Amazon stock sales for planned major expenses.
Consider increasing cash reserves as RSU values grow.
Act Early and Document Everything
Proper timing and documentation will help protect you from any accusations of inappropriate conduct.
Schedule major stock transactions during open periods.
Adjust tax-withholding elections early in open windows.
Avoid waiting until the last minute to make changes.
Keep records of all trading window communications and document your reasoning for your trading decisions.
Maintain files showing compliance with policies.
Be Smart, Stay Safe
When it comes to trading window compliance, it's always better to err on the side of caution. When in doubt, don't trade. Avoid any appearance of impropriety, and if you’re unsure about anything, seek guidance from a professional. No trade is worth jeopardizing your career, reputation, or legal standing.
Work with a Fiduciary Financial Advisor
Navigating trading windows can get complicated fast. A fiduciary financial advisor can help you:
Understand complex trading window regulations and compliance requirements
Develop tax-efficient strategies that work within trading restrictions
Create systematic approaches to diversification and risk management
Coordinate trading plans with broader financial goals and life changes
10b5-1 Trading Plans: Your Window During Blackouts
A 10b5-1 plan allows you to continue trading Amazon stock even during blackout periods. This is done by pre-scheduling transactions when you don't have sensitive non-public information.
How 10b5-1 Plans Work
Under Rule 10b5-1, insiders can trade company stock over a predetermined period and through blackout periods as long as the plan was put in place before they had access to relevant, non-public information. To qualify, this plan:
Must be established during an open trading window
Cannot be modified once material information is known
Require a cooling-off period (typically 30–90 days) before first trades
Must be pre-approved by Amazon's legal department
Types of 10b5-1 Plans
There are three main types of 10b5-1 plans:
Time-based plans (sell X shares on specific dates)
Price-based plans (sell X shares when stock reaches certain price targets)
Hybrid plans (combines time and price elements)
Time-based plans are good for systematic diversification and can provide predictable cash flow. Price-based plans, on the other hand, help you capture gains during blackout periods. For most employees, a hybrid plan will offer the best of both worlds.
Setting Up a 10b5-1 Plan
To set up a 10b5-1 plan, simply follow these steps:
Establish the plan during an open trading window when you don't possess material non-public information.
Get approval for all plans from Amazon's legal department.
Work with Fidelity (Amazon's RSU administrator) or your chosen brokerage to implement the plan.
Define exactly when, how much, and at what prices you want to trade.
Keep copies of your 10b5-1 plan documentation in case there is any confusion later on about your compliance with company policies.
Wait through the required cooling-off period before trades begin.
Once the cooling-off period is over, the plan will run automatically according to your preset instructions.
Just remember: Once your plan is in place, you will not be able to modify it once you have access to relevant non-public information. This can lead to making trades in unfavorable market conditions.
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Special Considerations for Amazon Employees
RSU Vesting and Trading Windows
Amazon's unique 5%-15%-40%-40% vesting schedule creates specific challenges:
Years 1–2: Smaller vesting amounts may not trigger significant tax issues, giving you more flexibility.
Years 3–4: Large vesting amounts often require immediate attention to tax planning and diversification.
Timing conflicts: RSU vesting dates may not align with trading windows, creating cash flow challenges.
Refresher Grants and Ongoing Planning
Most Amazon employees receive additional RSU grants annually, creating an ongoing need to manage multiple vesting schedules and trading restrictions. You can plan for this by:
Tracking all grant vesting schedules
Coordinating trading plans across multiple grants
Considering the impact of potential refresher grants on total compensation
Amazon's Evolving Compensation
Amazon periodically updates its equity compensation programs. Recent changes include:
The 2024 option for L4–L8 employees to convert 25% of 2025 RSU vests to cash
Elimination of traditional stock options in favor of RSUs
Changes to vesting schedules for new hires
Staying updated on future changes will help you make informed decisions with your Amazon trading windows.
Still Have Questions? TrueWealth Financial Partners Is Standing By!
Amazon's trading windows can make managing your RSUs and stocks a challenge. At TrueWealth Financial Partners, we help professionals just like you optimize their finances and save more for retirement. Our fiduciary financial advisors understand the nuances of Amazon's trading policies, RSU structure, and compensation changes, and we’re ready to give you the insights you need.
Ready to optimize your Amazon equity compensation while staying compliant with trading restrictions? Schedule a free consultation today, and we’ll be happy to help you in any way we can.
FAQs
How do I know if I'm subject to Amazon's trading windows?
Amazon will inform you during onboarding or when you move to a role that requires trading restrictions. Generally, senior leaders, finance employees, and those with access to material information are subject to windows. When in doubt, check with HR or your manager.
Can I change my RSU tax withholding election during a blackout period?
No, not if you are subject to blackout periods. You can only update this election during an open Amazon trading window.
What happens if I accidentally trade during a blackout period?
Contact Amazon's legal department immediately. Even accidental violations can result in termination and regulatory consequences. Prompt disclosure may help mitigate some consequences, but prevention is always better.
Can my spouse trade Amazon stock if I'm in a blackout period?
Trading restrictions typically apply to all household members, including spouses, dependent children, and anyone living in your home.
How long do Amazon trading windows last?
The typical trading window begins two to three trading days after the previous quarter's earnings release and ends approximately two to three weeks prior to the end of the next fiscal quarter. This means the trading window lasts about six weeks.
Can I set up a 10b5-1 plan during a blackout period?
No, a trading plan cannot be entered into during a blackout period. You must establish 10b5-1 plans during open trading windows when you don't possess material non-public information.
Do trading windows apply to my 401(k) contributions to Amazon stock?
Yes, trading includes transactions in Amazon securities contributed through your account in the Amazon 401(k) plan. This includes both contributions and sales within your retirement account.
What constitutes “material non-public information?”
“Material non-public information” means any information about Amazon that could significantly impact the stock price and isn't publicly available. This includes:
Financial results
Major business developments
Acquisitions
Partnerships
Strategic changes
When in doubt, assume information is material.
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