Insider trading occurs when those with access to material, non-public information trade a stock. While the rules governing insider trading are complex and vary country-to-country, corporate insiders are typically defined as officers, directors and beneficial owners of more than 10% of a class of a company’s stock.
When interpreting insider trading, traders should keep in mind that there are many different reasons that an insider may buy or sell a stock. For example, an executive might sell stock to diversify their portfolio or finance a large personal purchase. Insider buying—particularly when paying cash for stock in the open market—tends to produce the strongest signals.
Many traders compare insider trading activity to stock performance to find correlations, such as an increase in price following insider buying with cash.
TrendSpider’s Insider Trading widget provides traders with access to insider trading insights at a glance.
You can add the Insider Trading widget in a few steps:
- Click on the Sidebar button in the top-right corner of the screen.
- Click Add or remove widgets.
- Click ADD NEW WIDGET HERE on the bottom of the sidebar.
- Select Insider Trading from the menu.
- Click DONE on the top-left side of the sidebar editor.
The widget includes four parts:
- Insider Selector: The widget’s header lets you select what insider data you’d like to see, including “All insiders for this company”, “Only directors” or specific insiders. These selections affect all other parts of the widget.
- Acquisition/Deposition Chart: The chart shows aggregate insider trading activity over time, enabling you to see whether insiders are primarily buying or selling.
- The black line represents the asset price over time.
- The columns represent insider actions grouped by type and week.
- The 6-month and 1-year lines represent the on-balance volume (OBV) of cash-related insider actions (e.g., selling or buying for cash).
- Ownership Structure: The chart shows the percentage ownership held by different insiders. Note: “100%” is defined as “all shares owned by insiders” and not “all outstanding shares of the stock”.
- Transaction List: The insider transaction list shows each individual transaction sorted over time.
Rather than showing every transaction, we merge and filter them to provide the most relevant insights to traders.
- All option conversions and related activities are displayed as Option Exercise.
- All transactions of the same type made during a single day are merged.
- Data that’s older than one year isn’t displayed.
- Option Exercise transactions that are accompanied by other meaningful transactions (like a buy or a sell) are filtered out to only include the meaningful transactions.
The above chart shows significant insider selling for cash over the past 12 months. In addition to no “buy for cash” transactions, the selling accelerated in November 2020.
The above chart shows modest insider selling over the past 12 months, but an increase in buying for cash over the past six months.
The above chart shows that Mark Zuckerberg, a Facebook insider, has been heavily selling since November 2020.