Insider transaction (Form 4).

In plain English

A Form 4 is a report of a change in beneficial ownership filed by a company's officers, directors, and holders of more than a set percentage of its shares. It is due within a small number of business days after the transaction, so the public sees insider trades close to when they happen. The filing names the person, the transaction type, the number of shares, and the price. Many transactions are automatic, including option exercises, vesting of restricted stock, and sales under a plan adopted in advance. That is why the reason code on the filing usually matters more than the bare fact of a sale.

01Why it matters

Insider buying and selling becomes public within days, so anyone can check whether the people running a company are adding to their stake or reducing it, and under what circumstances.

02The math, step by step

Say an executive files a Form 4 showing 20,000 shares sold at 45 dollars, 900,000 dollars in total, coded as a sale under a preset plan adopted months earlier. A second executive files a discretionary open-market purchase of 5,000 shares. The smaller trade carries the clearer signal about intent.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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