Every line on a Form 4 carries a one-letter transaction code. Getting these right is the difference between reading insider data and being misled by it.
Here is the complete set, grouped by how much they actually tell you.
The two that matter most
P — Open-market or private purchase
The insider bought shares at the prevailing market price, with their own money.
This is the highest-signal event on a Form 4, and it is the only code that unambiguously represents a decision to acquire stock at a price the market set. Everything else on this page is either compensation, mechanics, or a transfer.
One caveat: a code P on Table II is a purchase of a derivative — options or warrants — not of the stock itself. That is a different and weaker claim.
S — Open-market or private sale
The insider sold shares into the market.
Sales are far more common than purchases, because most senior compensation is delivered in stock. Before reading anything into one, check whether it was made under a Rule 10b5-1 plan — if so, it was scheduled months in advance.
Compensation, not conviction
These appear as acquisitions or disposals, but nobody made a trading decision.
A — Grant, award or other acquisition under Rule 16b-3(d)
The company gave the insider shares or units as pay. They did not choose to buy and paid nothing. Counting this as insider buying is counting payroll as conviction, and it is the single most common error in insider trading coverage.
M — Exercise or conversion of a derivative security
The insider converted options or units — often granted years earlier — into shares. It records as an acquisition, but no market purchase happened; the price shown is the strike price set long ago.
Watch for the pairing: an M followed by a same-day S at a much higher price is an exercise-and-sell, which is a cash-out rather than a bet.
F — Payment of exercise price or tax liability by withholding securities
Shares handed straight back to the company to cover the tax bill on a vesting award, or to pay an option's exercise price. Mechanically a disposal, but nobody decided to sell.
Companies do this automatically. A large F usually just means a large award vested.
D — Disposition to the issuer under Rule 16b-3(e)
Shares returned to or repurchased by the company, typically under the terms of an equity plan.
Derivative mechanics
C — Conversion of a derivative security
Conversion of a convertible security into the underlying stock.
X — Exercise of an in-the-money or at-the-money derivative
O — Exercise of an out-of-the-money derivative
Exercising an out-of-the-money option is unusual, since it means paying more than market price.
E — Expiration of a short derivative position
H — Expiration or cancellation of a long derivative position with value received
Transfers
G — Bona fide gift
No money changed hands and no market price applies, so there is no dollar value to report. Gifts to charitable vehicles around year-end are common and carry no directional information.
W — Acquisition or disposition by will or the laws of descent and distribution
Inheritance.
Z — Deposit into or withdrawal from a voting trust
Beneficial ownership does not change.
Everything else
J — Other acquisition or disposition
A catch-all. The filer must explain it in a footnote — read the footnote, because a J can be almost anything.
K — Transaction in an equity swap or similar instrument
L — Small acquisition under Rule 16a-6
U — Disposition pursuant to a tender of shares in a change of control transaction
Usually means the company was acquired.
I — Discretionary transaction under Rule 16b-3(f)
A volitional transaction inside an employee benefit plan — for example, moving money between funds in a 401(k).
V — Transaction voluntarily reported earlier than required
Not a transaction type at all, but a timeliness marker.
The summary that matters
| If you only remember four | |
|---|---|
| P | Real buying |
| S | Real selling — check for a 10b5-1 plan |
| A and M | Compensation. Not buying, despite appearing as acquisitions |
| F | Tax withholding. Not selling, despite reducing the holding |