General information about public filing rules, not legal or investment advice. Check the primary sources below before relying on any detail.
Why the code matters
A Form 4 reports any change in an insider's beneficial ownership, and most of those changes are not decisions to buy or sell. Stock grants, option exercises, shares withheld for taxes, gifts and transfers into trusts all appear on the same form. The transaction code in Table I, column 3 and Table II, column 4 is what separates them.
The SEC's General Instruction 8 tells filers to use the code that most appropriately describes the transaction. The codes below are quoted from the current Form 4 instructions (form SEC 1474). They are grouped the way the SEC groups them.
General transaction codes
| Code | Official description |
|---|---|
| P | Open market or private purchase of non-derivative or derivative security |
| S | Open market or private sale of non-derivative or derivative security |
| V | Transaction voluntarily reported earlier than required |
P and S are the codes most people mean when they talk about insider buying and selling. Note the wording: P covers an open market or private purchase, and S an open market or private sale. A purchase in a private placement directly from the company can carry code P, so the code alone does not tell you the shares were bought on an exchange. The price, the footnotes and the size of the trade usually do. WaveMan's insider buying lists are built on code P rows.
V is not a transaction type. The instructions say to place V in the column when a transaction is voluntarily reported earlier than required, and to leave it blank otherwise.
Rule 16b-3 codes: compensation and the company
Rule 16b-3 exempts certain transactions between an insider and the company from Section 16(b), the short-swing profit rule. These codes mark them:
| Code | Official description |
|---|---|
| A | Grant, award or other acquisition pursuant to Rule 16b-3(d) |
| D | Disposition to the issuer of issuer equity securities pursuant to Rule 16b-3(e) |
| F | Payment of exercise price or tax liability by delivering or withholding securities incident to the receipt, exercise or vesting of a security issued in accordance with Rule 16b-3 |
| I | Discretionary transaction in accordance with Rule 16b-3(f) resulting in acquisition or disposition of issuer securities |
| M | Exercise or conversion of derivative security exempted pursuant to Rule 16b-3 |
How to read them
Code A is usually stock or options received as pay. Code F is usually shares the company withheld to cover the tax due when restricted stock vested, so a large F row is not the insider choosing to sell. Code M is an option exercise. An exercise is often followed by an S row on the same day if the insider sold the shares, or by an F row if shares were withheld to pay for it. Code D in this table is a disposition back to the company, which is a different thing from the "D" (disposed) marker in the acquired or disposed column.
Derivative securities codes
These cover derivatives outside the Rule 16b-3 exemption:
| Code | Official description |
|---|---|
| C | Conversion of derivative security |
| E | Expiration of short derivative position |
| H | Expiration (or cancellation) of long derivative position with value received |
| O | Exercise of out-of-the-money derivative security |
| X | Exercise of in-the-money or at-the-money derivative security |
Gifts, small acquisitions and other codes
The instructions group these as other Section 16(b) exempt transaction and small acquisition codes, followed by a short list of other codes:
| Code | Official description |
|---|---|
| G | Bona fide gift |
| L | Small acquisition under Rule 16a-6 |
| W | Acquisition or disposition by will or the laws of descent and distribution |
| Z | Deposit into or withdrawal from voting trust |
| J | Other acquisition or disposition (describe transaction) |
| K | Transaction in equity swap or instrument with similar characteristics |
| U | Disposition pursuant to a tender of shares in a change of control transaction |
Gifts
Rule 16a-3(g)(1) requires dispositions by bona fide gift to be reported on Form 4, within the same two business days as other changes. Gifts were added to the Form 4 requirement by the SEC's December 2022 amendments, which took effect on February 27, 2023.
J and K
If no code fits, the filer uses J and describes the transaction in the explanation of responses, so a J row always needs its footnote. K is used in addition to another code when the transaction involves an equity swap or a similar instrument, written for example as "S/K" or "P/K".
Common mistakes when reading codes
Most misreadings of insider activity come from treating every row as a trade. A few patterns cause most of them:
- Counting F as selling. When restricted stock vests, the company often keeps part of the shares to cover the tax. The insider did not place a sell order, and the row says nothing about their view of the stock.
- Counting A as buying. A grant is pay. The insider did not spend their own money.
- Reading M alone. An exercise turns options into shares. What happens next, a sale, a hold, or withholding, is in the following rows.
- Assuming P means an exchange trade. The official description is an open market or private purchase, so a P row can also be a private placement.
- Ignoring the derivative table. Table II often explains the shares that appear in Table I on the same filing.
Reading codes together
- M then S on the same day: options exercised and the shares sold.
- M then F: options exercised, with shares withheld for the price or the tax.
- A, later F: an award granted, then shares withheld for tax when it vested.
- S with the 10b5-1 box ticked: a sale under a plan adopted in advance. See what is SEC Form 4 for the cooling-off rules.
- G: shares given away, often to a charity, a trust or family. No sale price is involved.
Sales by insiders who are company affiliates are often preceded by a Form 144 notice, listed on WaveMan as planned sales. To see the codes on real filings, open any company page, such as Microsoft or Nvidia, or the day's insider buying.
Frequently asked questions
What does code P mean on Form 4?
Code P is an open market or private purchase of a non-derivative or derivative security. It covers purchases made privately, such as some private placements, as well as purchases on an exchange.
What does code F mean on Form 4?
Code F is payment of an exercise price or tax liability by delivering or withholding securities incident to the receipt, exercise or vesting of a security issued under Rule 16b-3. It is usually shares withheld to pay tax when stock vests, not a decision to sell.
What is the difference between code M and code X?
Code M is an exercise or conversion of a derivative security exempted under Rule 16b-3, typically an employee stock option. Code X is the exercise of an in-the-money or at-the-money derivative security outside that exemption.
Are gifts reported on Form 4?
Yes. Rule 16a-3(g)(1) requires dispositions by bona fide gift to be reported on Form 4. The code is G. The requirement came with SEC amendments effective February 27, 2023.
Sources
Every rule, deadline and threshold above was checked against these primary documents on 2026-10-12:
- SEC Form 4 and General Instructions (SEC 1474)
- 17 CFR 240.16a-3, reporting transactions and holdings
- Securities Exchange Act of 1934, Section 16 (15 U.S.C. 78p)
- 17 CFR 240.10b5-1, trading on the basis of material nonpublic information