---
title: "Open-Market vs. Derivative Transactions on Form 4"
description: "How to tell a Form 4 purchase from an award, conversion or tax withholding, using both tables, a real Apple RSU settlement and checks for double counting."
canonical: https://insideralpha.ai/learn/open-market-vs-derivative-transactions
date_published: 2026-06-01
date_updated: 2026-09-23
publisher: InsiderAlpha (https://insideralpha.ai)
---

Canonical URL: https://insideralpha.ai/learn/open-market-vs-derivative-transactions
Published 2026-06-01. Updated 2026-09-23.

# Open-market purchases, derivatives and compensation on Form 4

A Form 4 acquisition is not necessarily an insider buying stock on an exchange. The form records *what security changed* separately from *what transaction occurred*, and you need both to tell a purchase from an award, an option exercise, a conversion or a transfer.

[SEC Form 4 Instruction 4(c)](https://www.sec.gov/about/forms/form4.pdf) assigns non-derivative securities to Table I and derivative securities to Table II. Instruction 8 supplies the transaction codes. Table I can contain compensation-related common-stock acquisitions, while Table II can contain P or S purchases and sales of derivatives. So neither table, by itself, means "voluntary investing" or "compensation".

## Read the security before the transaction code

For Table I, copy the actual class: ordinary common shares and non-convertible preferred shares are not interchangeable. For Table II, record the derivative title, exercise or conversion price, expiration, underlying security and number of underlying shares. A derivative unit and an underlying share may not represent the same amount of exposure.

Restricted stock units can appear as derivative rights before settlement, with common shares reported when delivered. The terms and presentation of the award matter. Do not assume that every security labeled restricted stock, or every zero-price row, is treated the same way.

| Pattern | What to establish | What to avoid inferring |
| --- | --- | --- |
| P in Table I | Purchase of the stated non-derivative security; inspect private-sale and price footnotes | That every P was an exchange purchase funded with personal cash |
| P in Table II | Purchase of a derivative; inspect its terms and premium | That the unit count equals common shares bought |
| M in both tables | Exempt exercise or conversion, linking the derivative to the underlying security | Two independent purchases |
| F disposition | Delivery or withholding for an exercise price or tax liability | An open-market sale or a disclosed bearish motive |
| M and S nearby | An exercise/conversion and a separate sale; reconcile amounts and notes | That the entire sale was necessarily required for taxes |

## A real award settlement and withholding example

In [Tim Cook's Apple Form 4, accession 0001214156-25-000011](https://www.sec.gov/Archives/edgar/data/320193/000121415625000011/xslF345X05/wk-form4_1759530830.xml), the October 1, 2025 M rows show 277,206 RSUs settled into common shares. An F row reports 147,243 shares withheld for tax. The difference is 129,963 shares. The linked Table II disposition is the derivative being settled, not another purchase or sale of 277,206 common shares.

The calculation describes that settlement and withholding, not the entire filing's net change: separate S rows follow. To reconstruct the full movement, include those rows on the appropriate date and ownership basis. This is why summing every acquisition or disposition across both tables gives a misleading activity total.

## Price fields answer different questions

A derivative's purchase price, exercise price and underlying share price are distinct. Instruction 4(c)(iii) tells filers to leave the derivative-price column blank on an exercise or conversion while reporting the exercise or conversion price in its own column. Blank does not mean zero. Likewise, a footnote can supply noncash consideration or explain why a simple shares-times-price estimate is inappropriate.

For an ordinary cash purchase, shares multiplied by reported price can be a useful approximate transaction value. For a conversion, work out the conversion ratio and which security the price belongs to before you calculate anything. Label estimates as estimates and keep the original row values, so someone else can redo the arithmetic.

## Follow the connected rows

Open a filing from [the Form 4 feed](https://insideralpha.ai/filings), group rows by security and ownership form, and follow the footnote references. Our [code reference](https://insideralpha.ai/learn/form-4-transaction-codes) distinguishes transaction codes from the separate A/D and D/I columns. Then use the [purchase checklist](https://insideralpha.ai/learn/insider-buying-signals) or [sale checklist](https://insideralpha.ai/learn/insider-selling-signal-or-noise) for the economic transaction you actually found.

*This article is informational and is not investment advice.*