Oct 14, 2025 · 10 min read

What is Form 4? How to Track Insider Buying and Selling

Learn how to read Form 4 filings, understand insider trading patterns, and use this data to inform your investment decisions.

When a CEO buys $5 million worth of their own company's stock, it means something. When the entire executive team sells right before earnings, that means something too.

Form 4 is how you track these moves. It's the SEC filing that company insiders must submit whenever they buy or sell stock. For investors, Form 4 data provides a window into what the people running companies actually think about their own stock.

This guide explains everything you need to know about Form 4: what it is, who files it, how to read it, and how to use insider trading data in your research.

What is Form 4?

Form 4 is an SEC filing that reports changes in ownership by company insiders. When someone covered by Section 16 of the Securities Exchange Act buys or sells stock (or receives options, RSUs, or other equity), they must report it on Form 4.

Key facts:

Filing deadline: Within 2 business days of the transaction
Who files: Officers, directors, and 10%+ shareholders
What's reported: Any change in beneficial ownership of company securities
Where to find it: SEC EDGAR and Earnings Feed's insider hub

Form 4 is one of the fastest SEC filings—that 2-day deadline means insider transactions become public almost immediately. This speed makes Form 4 data actionable in a way that quarterly reports aren't.

Who Qualifies as an "Insider"?

Not everyone at a company is an insider for SEC purposes. Form 4 requirements apply to three categories:

1. Officers

Key executives with policy-making authority:

CEO (Chief Executive Officer)
CFO (Chief Financial Officer)
COO (Chief Operating Officer)
President
Principal accounting officer
Any VP in charge of a principal business unit

2. Directors

All members of the board of directors, including:

Independent directors
Executive directors (like the CEO if they're on the board)
Committee chairs

3. Beneficial Owners of 10%+ Shares

Anyone who owns more than 10% of a company's voting stock, including:

Activist investors
Founding shareholders
Private equity firms
Other corporations

Important note: "Beneficial ownership" includes shares owned through trusts, family members, or entities the person controls. You can't hide insider status through legal structures.

How to Read a Form 4

Form 4 filings look intimidating at first, but they follow a standard structure. Here's what each section tells you:

Header Information

At the top of every Form 4:

Company name and ticker: Which company's stock was traded
Insider's name: Who made the trade
Relationship to company: Officer, director, or 10% owner
Date filed: When the Form 4 was submitted to the SEC

Table I: Non-Derivative Securities

This is where you'll find regular stock transactions:

Column	What It Means
Date of Transaction	When the trade occurred
Transaction Code	Type of transaction (see codes below)
Securities Acquired (A) or Disposed (D)	Buy (A) or sell (D)
Amount	Number of shares
Price	Per-share price
Shares Owned After Transaction	Insider's total holdings

Table II: Derivative Securities

This covers options, warrants, and other derivatives:

Column	What It Means
Title of Derivative	Type of security (stock option, RSU, etc.)
Exercise Price	Price to convert to common stock
Exercise Date	When derivative was exercised
Expiration Date	When derivative expires
Underlying Shares	How many shares the derivative represents

Transaction Codes

The transaction code tells you why the trade happened:

Code	Meaning	What to Watch For
P	Open market purchase	Most bullish—insider buying with their own money
S	Open market sale	Could be negative signal or routine diversification
A	Grant or award	Stock compensation, less meaningful
M	Option exercise	Converting options to stock
F	Payment of tax	Shares withheld for taxes, routine
G	Gift	Donated shares, usually not meaningful
J	Other acquisition	Various technical transactions

Focus on P (purchases) and S (sales)—these are the deliberate decisions that reveal sentiment.

Why Insider Trading Data Matters

Insiders know things. They see the sales pipeline, the competitive threats, the problems not yet public. While they can't trade on material non-public information (that's illegal insider trading), they can trade on their general view of the company's prospects.

The Research on Insider Trading

Academic studies consistently find:

Insider buying predicts outperformance: Stocks with heavy insider buying outperform the market by 6-10% annually
Cluster buying is strongest: When multiple insiders buy simultaneously, the signal is more reliable
CEO/CFO transactions matter most: Executives closest to operations have the best information
Insider selling is less predictive: Executives sell for many non-negative reasons (diversification, taxes, house purchases)

What Insider Buying Suggests

When an insider buys stock on the open market, they're betting their own money that the stock will go up. Consider:

They already have huge exposure through salary and options
They have material information about the business
They're still choosing to buy more

That's a vote of confidence.

What Insider Selling Doesn't Necessarily Mean

Insider selling is trickier to interpret. Executives sell for many reasons:

Diversification: Their net worth is concentrated in one stock
Tax obligations: Exercise options and need cash for taxes
Personal expenses: Buying houses, paying for college, divorce
Planned sales: 10b5-1 plans established months in advance
Estate planning: Gifts to family or charity

Heavy selling can signal problems, but a single sale rarely means much. Look for patterns and context.

Patterns That Matter

Not all insider transactions are created equal. Focus on these high-signal patterns:

1. Cluster Buying

What it is: Multiple insiders buying within a short period

Why it matters: One executive buying could be personal. When the CEO, CFO, and three board members all buy in the same week, something's happening.

Example: In late 2022, multiple Meta executives bought stock after it crashed 70%. The stock tripled over the next two years.

2. Buying After Bad News

What it is: Insiders purchasing after a stock drops on earnings or guidance

Why it matters: They're signaling the selloff is overdone and they believe in the recovery

Example: Bank executives buying their own stock during the 2023 regional banking crisis—some recovered strongly, others didn't. Do your own research.

3. First-Time Purchases

What it is: An insider who's never bought suddenly makes an open market purchase

Why it matters: If someone has been at a company for years and never bought stock (only received grants), a sudden purchase stands out

4. Large Purchases Relative to Salary

What it is: Buys that represent meaningful money for that executive

Why it matters: A CEO buying $50K of stock when they make $20M annually is irrelevant. A director buying $500K when their annual retainer is $300K—that's a real bet.

5. Buying During Blackout Windows (When Legal)

What it is: Purchases right after blackout periods end

Why it matters: Insiders can't trade just before earnings. If they buy immediately after the window opens, they've been waiting to act.

Patterns to Discount

Some transactions look significant but usually aren't:

Automatic Sales (10b5-1 Plans)

Executives often establish pre-planned selling programs called 10b5-1 plans. These run automatically regardless of stock price or news. Look for footnotes indicating "Rule 10b5-1 trading plan"—these sales don't reflect current sentiment.

Option Exercise + Immediate Sale

When insiders exercise options and immediately sell, they're usually just managing tax obligations or capturing value from expiring options. It's not a deliberate bet against the stock.

Tax Withholding (Code F)

Shares withheld to cover taxes on vesting RSUs aren't sales in any meaningful sense. The insider didn't choose to sell—taxes were due and shares covered the bill.

Directors' Routine Sales

Board members often sell on a regular schedule to meet personal financial needs. A director selling the same dollar amount every quarter is a routine pattern, not a red flag.

How to Track Form 4 Filings

Earnings Feed

Track insider trading on Earnings Feed with:

Real-time Form 4 filings as they hit EDGAR
Filter by company, executive, or transaction type
Company profiles showing all insider activity
Watchlist integration for your portfolio

OpenInsider

OpenInsider.com specializes in Form 4 data:

Cluster buy detection
Insider profiles across companies
Historical transaction data
Screening by transaction size and type

SEC EDGAR

Search for "Form 4" filings directly on SEC EDGAR. It's the official source but harder to use than dedicated tools.

Building an Insider Trading Research Process

Here's a practical workflow for using Form 4 data:

Screening (Weekly)

Check for cluster buying across the market
Look for insider purchases after significant stock drops
Note any first-time buyers at companies you follow

Due Diligence (Per Investment)

Before buying any stock:

Review insider transactions over the past 12 months
Note the pattern: net buyers, net sellers, or neutral?
Check if any insiders bought recently at similar prices
Look for 10b5-1 plans that explain regular selling

Monitoring (Ongoing)

For stocks you own:

Add companies to your Earnings Feed watchlist
Pay attention to any unusual buying or selling
Research the context for any large transactions

Red Flags in Insider Data

Some patterns warrant extra scrutiny:

Red Flag	What It Might Mean
CEO selling heavily with no 10b5-1 plan	Personal concern about the stock
Multiple executives selling before earnings	Potential bad news coming
New CFO immediately selling	Questions about what they saw when they joined
Director resigning and selling	Sometimes accompanies governance concerns
Large sales right after stock price spike	Concern the price isn't sustainable

Remember: insider selling can have innocent explanations. But combined with other red flags, it's worth investigating.

The Legal Line: What's Allowed

Insider trading is legal when properly disclosed. What's illegal is trading on material non-public information (MNPI).

Legal insider trading:

Buying or selling based on general business knowledge
Planned trades established during trading windows
Trades disclosed on Form 4 within 2 days

Illegal insider trading:

Trading while knowing about unannounced mergers
Buying before a positive earnings surprise you know about
Tipping others to trade on confidential information

The Form 4 system exists to make legal insider trading transparent. When you see a Form 4 filing, the trade itself was legal—the question is what it signals about the insider's view.

Summary

Form 4 is your window into what company insiders really think. While insider data shouldn't be your only research input, it provides valuable context that public statements and earnings calls don't capture.

Key takeaways:

Focus on open market purchases (code P)—these are the clearest signal
Cluster buying by multiple insiders is more significant than individual trades
Insider selling often has innocent explanations—look for patterns, not single sales
CEO and CFO transactions carry more weight than other insiders
Context matters: a small purchase for a billionaire CEO means less than a large one for a director

Use Form 4 data to supplement your fundamental research, not replace it.

Track Insider Trading for Free

Never miss important insider transactions. Create a free watchlist on Earnings Feed and see Form 4 filings the moment they hit EDGAR.

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