Methodology: Insider Transactions (Form 4) Chip

What the chip says and what it means

On any stock page, near the ticker price, you may see one of four chips: INSIDERS BUYING, INSIDERS SELLING, INSIDERS FLAT, or INSIDERS — (em-dash). Each label encodes the result of a specific 90-day calculation against Form 4 filings reported to the SEC. This page documents exactly which calculation, what the thresholds are, when the chip is hidden, and when it has changed.

The chip is informational, not advice. Cluster insider buying is one input among many; insider selling can be driven by tax planning, diversification, or compensation plans rather than a negative view. Read the underlying Form 4 transactions on the insider tab before drawing a conclusion.

1. Data source

The chip reads GET /api/insiders?ticker=<T>&period=90d. The backend (routes/routes_analysis_fastapi/options_insiders.py) returns the Form 4 transactions for the ticker in the last 90 calendar days plus a float field carrying the most-recent reported shares-outstanding count from the company’s annual filing. The transactions come straight from SEC EDGAR via the platform’s Form 4 parser; no commercial data vendor sits between EDGAR and the chip.

Form 4 is the SEC’s reporting form for changes in beneficial ownership by company insiders — officers, directors, and ten-percent shareholders. It must be filed within two business days of the transaction. The chip’s 90-day window means it reflects roughly the last quarter of named-insider activity.

2. Transaction-code mapping

Bucketing is deliberate. We do not net option-exercise (M) into buy or sell because the exercise itself is a wash and the more interesting signal is what the holder did with the resulting shares (which surfaces as a separate P or S row). We do not count gifts (G) because they don’t reflect a directional view. Tax-withholding (F) is excluded for the same reason — it’s a forced sale, not a voluntary one.

The code mapping lives in static/js/ticker-renderer.ts in _renderInsiderNetFlowChip.

3. The 1%-of-float threshold

Aggregate share counts cross the 90-day window:

• buy_shares — sum of shares across all BUY-bucketed transactions
• sell_shares — sum of shares across all SELL-bucketed transactions
• net_shares = buy_shares − sell_shares

The chip is then classified as:

• INSIDERS BUYING if net_shares > 0 AND buy_shares ≥ 1% of float
• INSIDERS SELLING if net_shares < 0 AND sell_shares ≥ 1% of float
• INSIDERS FLAT in every other case where float is known

Float is the count of freely-tradable shares (shares outstanding excluding restricted and insider-held blocks). The 1%-of-float threshold filters out single-employee transactions that are too small to be directionally meaningful on a company-wide basis. For a 200-million-float company, a single 15,000-share open-market buy by one director clears the threshold; a 500-share tax-withholding does not.

One percent is policy, not a tuning knob. It was chosen because it is high enough to filter routine compensation-plan activity and low enough that real cluster-buying still trips it on mid-cap and large-cap companies. The constant lives at static/js/ticker-renderer.ts as floatShares * 0.01.

4. The em-dash chip (fail-closed)

When the backend cannot determine the company’s float — usually because the most recent annual filing has not been indexed yet, or for a newly-listed ticker where shares-outstanding has not been reported — the chip renders as INSIDERS — (em-dash) rather than FLAT.

This is a deliberate visual distinction. Before 2026-04-27, a missing float silently collapsed the 1% threshold to zero, which painted every single-share net-buy as INSIDERS BUYING. The em-dash chip exists so that “we don’t know the float” reads differently than “we know the float and activity was balanced.” The aria-label and hover title on the em-dash chip carry the explanatory text.

5. Lookback window + caching

The lookback is a rolling 90 calendar days from the moment the page is loaded. Older Form 4 transactions are still readable on the insider tab; they just don’t affect the chip.

The chip caches its result for 5 minutes per ticker per browser session. A fresh fetch happens on every new ticker, on every page load after the cache expires, and on every hard refresh. The cache lives in memory only; closing the tab clears it.

6. Click behavior

Clicking the chip scrolls the page to #insider-feed-section — the table of underlying Form 4 transactions that produced the label. Keyboard users can use Enter or Space to trigger the same scroll. The chip never opens a separate page or modal; the full transactions are inline so a reader can audit the classification.

7. What we deliberately do not do

• No sentiment score on top of the chip. The label is mechanical: did transactions clear the threshold or not. We don’t layer a 1-to-10 conviction score because the underlying classification rule is already what we’d be scoring.
• No insider-by-name highlights on the chip itself. Some platforms surface “CEO bought” vs “director bought.” The chip stays aggregate; named-insider detail is one click away in the insider tab.
• No 10-percent shareholder reweighting. A 10-percent shareholder’s transactions count the same as an officer’s in the aggregate. The insider tab shows the role label per row so a reader can weight it themselves.
• No price-level information in the chip. We classify by share count, not dollar volume. A small-share, high-price transaction can clear the dollar bar without clearing the share bar; we use shares because the SEC filing’s ownership concept is share-denominated.
• No chip on ETFs. ETFs do not have insiders in the Form 4 sense; the chip is suppressed at render time for any ticker that the platform classifies as an ETF.

8. Changelog

Source code and references

Backend route: routes/routes_analysis_fastapi/options_insiders.py (api_insiders). Frontend chip renderer: static/js/ticker-renderer.ts (_renderInsiderNetFlowChip + _applyInsiderNetFlowChip). Contract tests: tests/test_routes_insiders_contract.py (pins the float field presence and the error-response shape).

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