insider-activity-trading

name	insider-activity-trading
description	Parse and evaluate SEC insider filings as delayed contextual evidence. Use when analyzing Form 4 codes, holdings changes, footnotes, amendments, purchase/sale clusters, and 10b5-1 disclosures.
license	Apache-2.0
metadata	{"author":"ske-labs","version":"4.0"}

Insider Activity Trading

Use insider filings as delayed, contextual evidence. A transaction may reflect valuation views, compensation, taxes, liquidity needs, ownership policy, or a trading plan; it does not reveal motive by itself.

Filing Fields

Record issuer, insider role, filing and transaction timestamps, direct/indirect ownership, transaction code, price, shares, post-transaction holdings, footnotes, derivative status, and 10b5-1 disclosure. Confirm amendments and avoid double counting the same beneficial owner.

Signal Interpretation

Open-Market Purchases

Factor	Stronger Signal
Multiple independent insiders buying	Candidate cluster; define window before testing
Large purchases	Meaningful % of holdings
After price drop	Buying the dip
C-suite buying	CEO/CFO conviction

Sales and Other Codes

Separate open-market purchases/sales (P/S) from grants, option exercises, tax withholding, gifts, and other codes. Read footnotes and plan disclosures; even an open-market purchase or sale has an unobserved motive.

Selling Reason	Signal Strength
Planned (10b5-1)	Contextual; inspect adoption date, terms, and amendments
Diversification	Weak negative
After big run-up	Moderate negative
Unusual amount	Stronger negative
Multiple C-suite selling	Candidate cluster requiring plan/code/holdings context

Bullish vs Bearish Patterns

Bullish	Bearish
CEO buying the dip	Multiple C-suite selling
Independently defined purchase cluster	Selling right after guidance
Large $ purchases on weakness	Unusual volume of sales
Buying after bad news	Selling before scheduled news

Workflow

1. Research Insider Activity

get_financial_news(topic="AAPL insider buying selling SEC Form 4 filing", max_results=15)
get_fundamentals(ticker="AAPL")

Look for: recent Form 4 filings, transaction size, buyer/seller role, and whether purchases are scheduled (10b5-1) or discretionary.

2. Assess Pattern

• Single insider selling = low signal, check if 10b5-1 planned
• Single insider buying = moderate signal, check size relative to holdings
• Purchase cluster = count independent insiders within a predeclared window and compare with issuer history
• C-suite selling unusual amounts = red flag, investigate further

3. Combine with Fundamentals

Insider activity is a confirming signal, not standalone. Cross-reference with company fundamentals, recent earnings, and technical setup before acting.

Evidence and Validation

• Treat the setup as a testable hypothesis, not a prediction. Define thresholds, entry, invalidation, and exit before evaluating outcomes.
• Calibrate on the same instrument, venue, session, and timeframe. Use closed candles and a held-out or walk-forward sample; record every variant tried.
• Include spread, fees, slippage, borrow or funding, partial fills, and latency. Reject the setup when net expectancy is not positive or depends on one narrow parameter.
• Return observed inputs, missing data, cost assumptions, entry, invalidation, exit, and a valid, watch, or no-trade status.
• Research basis: The SEC Form 3/4/5 bulletin explains codes and two-business-day reporting, while the 10b5-1 rule requires plan-related disclosures.

Key Rules

• Never trade on a headline; parse the filed form, codes, footnotes, ownership, and amendments.
• Do not equate a 10b5-1 label with neutrality or a transaction with a disclosed motive.
• Normalize transaction value by prior holdings, compensation, market capitalization, and insider history.
• Use filing availability time—not transaction time—to prevent look-ahead bias; Form 4 is generally due within two business days, subject to form rules.
• Define cluster windows and event exclusions before testing; report no trade when context is missing.

Related Skills

• earnings-trading -- Insider activity around earnings signals management confidence
• sentiment-analysis -- Insider buying is a high-credibility input to sentiment scoring