April 2026·Reference
Insider Trading Glossary
Clear definitions of the key terms used in insider trading analysis and SEC Form 4 research. A reference for investors using InsiderAct signals.
Quick Reference
Key insider trading terms: SEC Form 4 — the mandatory SEC disclosure filed within 2 business days of any insider transaction; cluster buying — 2+ insiders independently buying within 7–14 days (strongest public signal); open-market purchase — a discretionary buy with personal funds (Form 4 code "P"); 10b5-1 plan — a pre-scheduled trading arrangement carrying lower signal value; corporate insider — any officer, director, or shareholder owning 10%+ of a company.
SEC Form 4Corporate InsiderOpen-Market PurchaseCluster BuyingLarge Insider Purchase10b5-1 PlanBuying the Dip (Insider)Blue-Chip Insider BuyingSEC EDGARTransaction Code (Form 4)Option ExerciseFiling Deadline (Form 4)Insider Selling
- SEC Form 4
- A mandatory public disclosure filed with the U.S. Securities and Exchange Commission within 2 business days of any stock transaction by a corporate insider. Form 4 records the insider's name, their title or relationship to the company, the transaction date, number of shares, price per share, and transaction type. All Form 4 filings are publicly available on SEC EDGAR.Learn more →
- Corporate Insider
- Under SEC rules, a corporate insider is any officer (CEO, CFO, COO, General Counsel, etc.), member of the board of directors, or shareholder who owns more than 10% of a company's outstanding shares. All corporate insiders must report their stock transactions to the SEC via Form 4 within 2 business days.
- Open-Market Purchase
- A stock purchase made by an insider on the open market using personal funds, at the prevailing market price. This is the highest-quality signal type in insider trading data because it represents a discretionary investment decision with real money at risk. Contrasted with option exercises, grants, and awards, which do not reflect a new financial commitment.Learn more →
- Cluster Buying
- A pattern where two or more corporate insiders independently make open-market stock purchases within a short window — typically 7 to 14 days. Cluster buying is considered one of the strongest publicly available signals in insider trading data because it requires multiple independent decision-makers to act on the same conviction simultaneously.Learn more →
- Large Insider Purchase
- An open-market stock purchase of $100,000 or more made by a single corporate insider. InsiderAct tracks large purchases as a distinct signal type because the size of the transaction indicates a meaningful personal financial commitment, filtering out routine or token purchases that add noise to the data.Learn more →
- 10b5-1 Plan
- A pre-scheduled trading arrangement established by a corporate insider in advance, specifying the conditions (price levels, share volumes, or dates) under which shares will automatically be bought or sold. Named after SEC Rule 10b5-1. Trades executed under a 10b5-1 plan carry significantly less informational signal than discretionary purchases because the decision was made in the past.Learn more →
- Buying the Dip (Insider)
- An insider trading signal pattern where a corporate executive or director makes a significant open-market purchase of their own company's stock following a notable price decline. This is considered a high-conviction signal because the insider is putting personal capital to work at a lower price, suggesting they believe the sell-off is overdone.Learn more →
- Blue-Chip Insider Buying
- Open-market stock purchases made by executives at large-cap, well-established companies (typically S&P 500 or Fortune 500). Because these insiders are often wealthy and can easily diversify, a meaningful open-market purchase signals genuine conviction rather than speculative risk-taking. InsiderAct surfaces net buying activity across blue-chip companies as a dedicated signal.Learn more →
- SEC EDGAR
- The Electronic Data Gathering, Analysis, and Retrieval system operated by the U.S. Securities and Exchange Commission. EDGAR is the public database where all mandatory SEC filings — including Form 4 insider trading disclosures — are published and freely accessible. InsiderAct ingests Form 4 filings from EDGAR in near real time.
- Transaction Code (Form 4)
- A single letter on Form 4 that identifies the type of transaction. The most important code for investors is "P" (open-market purchase), which represents a discretionary buy with personal funds. Other common codes include "S" (open-market sale), "A" (grant/award), and "M" (option exercise). InsiderAct focuses primarily on "P" transactions.Learn more →
- Option Exercise
- The conversion of pre-granted stock options into shares, typically at a discounted strike price. Option exercises appear on Form 4 but are generally not treated as signals by investors because they do not involve new personal capital. They are often followed immediately by sales to cover taxes, further reducing their informational value.
- Filing Deadline (Form 4)
- Corporate insiders are required to file Form 4 within 2 business days of any reportable transaction, as mandated by the Sarbanes-Oxley Act of 2002. This deadline applies to all transactions by officers, directors, and 10%+ shareholders of publicly traded U.S. companies. Late filings are still accepted by the SEC.Learn more →
- Insider Selling
- Stock sales by corporate officers, directors, or major shareholders. Insider selling is generally a weaker signal than insider buying because insiders may sell for many reasons unrelated to company outlook — diversification, tax planning, personal expenses, or 10b5-1 plan executions. High-conviction selling signals include large coordinated sales by multiple insiders simultaneously.Learn more →