Free course · Module 4
How to Read a Form 4
A reported insider transaction is a clue to investigate. Learn to read the person, code, price, holding and footnotes, then separate a purchase or sale from awards, exercises, tax payments and gifts.
Written by the StockEducation Editorial Team · Reviewed by Associate Professor Charles Lo, CPA, PhD · Updated 19 Oct 2026 · How we check lessons
Pick a topic to learn
Read in order, or return to the idea you need.
Idea 1 of 4
Start with the person and the row.
Form 4 reports changes in an insider’s beneficial ownership. Covered directors, officers and owners of more than 10% of a registered equity class report most transactions. The usual deadline is the end of the second business day following the transaction, subject to the applicable timing rules and exceptions. Source 1; Source 2.
Read the reporting person and company first. Table I covers non-derivative securities such as common shares; Table II covers derivatives such as options. Match each row’s date, code, quantity and price, then read its footnotes. The filing date and the header’s earliest transaction date need not be the date of every row.
Common stock · one simplified row
Director · Example Co. (XMP)
Filing date can be later
Purchase · read the footnote
A = acquired in this column
For this direct holding
Direct ownership
Confirm whether a price is an average, whether the transaction is private or on-market, and whether other rows change the picture.
Read across the row before interpreting the headline.
Who files, and what does the deadline mean?
A filing can contain different transactions on different dates.
Idea 2 of 4
Read the code before the headline.
The transaction code tells you what kind of event was reported. P and S cover open-market or private purchases and sales. Other letters can reflect compensation, exercises, withholding or gifts. A code alone does not establish motive or future performance.
There are also separate letters for acquired/disposed and direct/indirect ownership. In Table I, read the transaction code in column 3, A or D in column 4, and D or I in column 6 in their own context. Source 1.
Open market or private purchase.
Open market or private sale.
Acquisition under Rule 16b-3(d), often compensation.
A derivative transaction exempt under Rule 16b-3.
Shares delivered or withheld for an exercise price or tax liability.
A bona fide gift; not an ordinary sale.
Do not count every acquisition as a cash purchase or every disposition as an open-market sale.
The same letter can mean different things
What does the Rule 10b5-1 box tell you?
A checkbox or a transaction letter cannot explain the whole trade.
Idea 3 of 4
Size the trade against the holding.
Compare the transaction with the matching holding afterward. On Stephen J. Hemsley’s May 16, 2025 UnitedHealth report, Table I shows a P purchase of 86,700 common shares at a weighted-average $288.57, with 679,492.942 shares held directly afterward. The footnote gives a price range of $287.05 to $289.38. Source 4.
The reported purchase represents about 12.8% of that after-row direct holding. That is a share-count comparison, not 12.8% ownership of UnitedHealth or a measure of the insider’s wealth.
Table I · common stock · direct holding
Transaction code P
Holding reported in the row
At the reported average price, the illustrative gross purchase amount is about $25.0 million.
Read the other holdings and the option award
What can the research tell you?
Compare like-for-like shares, then investigate the context.
Idea 4 of 4
Write a reading note, not a trading signal.
Practice with six fictional rows. Each starts with 1,000 direct common shares and assumes only the selected event changes that holding. Choose an event, read the resulting row, then change the plan-box setting to see what it does and does not establish.
Read the row before reacting
Fictional practice · no trades placedChoose a transaction
Read the selected row.
Rule 10b5-1 box in this example
Read the checkbox with the footnotes.
Simplified examples, not actual filings or tax calculations. The M case does not display its matching derivative row. A plan flag describes claimed intended Rule 10b5-1 treatment; it is not a legal finding or a return forecast.
Try three checks
- Compare P with A. Explain why the same increase to 1,200 shares does not mean the same economic event.
- Compare S with F. Record why both reduce the holding but should not be grouped as ordinary market sales.
- Toggle the plan box. Write one fact it adds and one conclusion it cannot support.
Finish a research note: “This row reports _____, dated _____, with _____ held afterward. Before interpreting it, I still need to check _____.”
Find the original filing and practice on EDGAR
A good reading note separates what the filing says from your interpretation.
Quick check
Three quick checks. Feedback straight away.
A Form 4 row has transaction code F. What does it describe?
Choose an answer to see the explanation.
Assume an ordinary Monday, June 1, 2026 transaction, with no applicable holiday or special timing rule. What is the usual Form 4 deadline?
Choose an answer to see the explanation.
What is a sound conclusion from a P purchase row?
Choose an answer to see the explanation.
Review your takeaway card and the learning path
- Identify the filer and the row. Dates and securities can differ within one report.
- Decode the event. A purchase, award, exercise, withholding and gift are different.
- Size it carefully. Compare the matching holding and read indirect ownership.
- Keep the context. Plans, footnotes and business research matter; no row promises returns.
Reading markers and these practice checks stay on this device. They do not mark the LMS lesson complete.
Sources and assumptions
- SEC: Form 4 and General Instructions. March 2026 edition; tables, code list, filing timing, ownership, amendments and plan indication.
- Investor.gov: Insider Transactions and Forms 3, 4 and 5. Who reports, common codes, report purposes and possible liquidity/diversification reasons for sales. Read with the newer form and amendments.
- SEC: Rule 10b5-1 amendments fact sheet. 2022 amendments, cooling-off periods, plan conditions, checkbox and Form 4 gift reporting.
- SEC EDGAR: Stephen J. Hemsley, UnitedHealth, May 16, 2025. Historical Table I purchase and holdings, Table II option award and explanation footnotes. Numerical examples are calculations from these reported figures.
- SEC: Search Filings. Official access to company, ownership and full-text filing searches.
- Cohen, Malloy and Pomorski: Decoding Inside Information. NBER Working Paper 16454 (2010); published in Journal of Finance (2012). Historical routine/non-routine insider-trading evidence, not a promised strategy return.
Sources checked 19 October 2026. The UnitedHealth report is a dated reading example, not a current ownership snapshot or recommendation. The practice rows are fictional and simplified. Local reading and practice controls do not mark an LMS lesson complete.
StockEducation provides general education, not personal financial, tax or legal advice. Nothing here recommends a specific security. Investing involves risk, including loss of money you invest.
