The transaction codes
Every row on a Form 4 carries a one-letter code. P is an open-market or private purchase and S an open-market or private sale: the insider decided to buy or sell and paid or received the market price. A is a grant, award or other acquisition from the company, usually compensation. M is the exercise or conversion of a derivative such as an option, F is shares withheld or delivered to cover tax or an exercise price, G is a gift, D a disposition back to the issuer, C a conversion of a derivative, X the exercise of an in-the-money or at-the-money option, and J any other transaction, explained in a footnote.
The codes separate decisions from mechanics. An award (A) is pay. An exercise (M) followed by a withholding (F) is an executive receiving vested shares and paying the tax; no money changed hands at the insider’s choice. Only P and S reflect a choice to put money in or take it out at the prevailing price.
Why only P and S are scored
InsiderTell stores every row but scores only P and S, because only they say something about what the insider thinks the stock is worth. An insider’s P rows in one filing are summed into one buy signal and S rows into one sell signal, with the shares, the average price and the value in dollars. A P row with a price that cannot be a market price, far from the day’s close, is kept as filed but left out of value rankings. Sales that fund an option exercise in the same filing and sales under a 10b5-1 plan are scored with heavy deductions, since they are usually mechanics as well.
Questions
What does transaction code P mean on a Form 4?
An open-market or private purchase: the insider bought shares and paid for them. Code S is the matching sale. These are the only two codes that record a decision to trade at the market price.
Is an option exercise an insider buy?
No. An exercise (code M) converts a right the insider already held into shares, usually at a price fixed years earlier, and is often paired with a withholding (F) or a sale (S) to cover the cost. It says nothing about the current price, so InsiderTell shows it and does not score it.
Why do insiders sell so much more than they buy?
Because most of what they hold arrived as compensation. Sales are how executives turn pay into cash and diversify, often on a 10b5-1 schedule. That is why an open-market purchase is rarer and studied more closely.