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I've read that large insider stock purchases are considered a good confidence signal for its near future.

But, as I understand, the SEC reports about insider purchases may also include stock option exercises. Which means there could be other reasons for those events, such as people leaving their job, intending to cash out and sell their stock, i.e. not indicative of their confidence.

Is there a way to distinguish these two type of purchase reports?

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  • If an insider cashed out, whether due to lack of confidence in the company, needing the money or leaving the company, would it matter if the securities were options or shares? Perhaps he just wanted out? Mar 1 '20 at 4:30
  • Well, if they sell a stock, that's a different story. But if they exercise options to get the stock, it will show up as a buy, until (if) they sell it later. Mar 1 '20 at 16:16

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