Transactions involving options, warrants, and convertible securities.
Definition
Form 4 Table II reports derivative securities such as options, warrants, and convertible instruments, including transaction code, exercise or conversion price, exercise and expiration dates, title and amount of underlying securities, and derivative holdings after the transaction.
Table II reports derivative securities and the contractual path to underlying shares. It must be reconciled with Table I to avoid double counting grants, exercises, conversions, withholding, and sales.
Related Form 4 codes
Anatomy of Table II
A derivative row can report security title, conversion or exercise price, transaction date and code, acquired or disposed amount, exercise date, expiration date, title and amount of underlying securities, derivative holdings after the transaction, and D/I ownership nature.
Options, warrants, convertible securities, and other reportable derivatives can have different economics. A high exercise price or distant expiration date does not reveal management intent or guarantee an incentive effect.
Table II to Table I Reconciliation
A Code M exercise usually disposes of the derivative in Table II and acquires the underlying common stock in Table I. Code F can cover exercise price or tax, and Code S can record a separate sale.
Use accession, transaction date, sequence, derivative title, underlying security title, and underlying share count to link rows while preserving each code. Do not add the derivative conversion and underlying acquisition as two independent buys.
How It Appears in InsiderAlpha Data
transaction_table distinguishes non-derivative and derivative rows; security_title, Type, Shares, Price, acquired_disposed, shares_owned_after, and transaction_sequence preserve the normalized event. Derivative-specific columns require source XML or expanded schema when they are not present in a flat sample.
Quality rules should flag incomplete pairs, missing underlying share counts, amendments, and inconsistent post-transaction balances.
Derivative Event Reconstruction
| Event | Table II | Table I / Flow Treatment |
|---|---|---|
| Grant | Derivative acquired, often Code A | Compensation context; not Code P purchase flow. |
| Exercise | Derivative disposed under Code M | Underlying acquired; link rather than double count. |
| Withholding | May fund exercise or tax | Code F remains outside Code S sale flow. |
| Sale | Derivative or underlying sold | Classify the actual S row and preserve plan context. |
Primary Sources & Filing References
- SEC Form 4 General Instructions
Primary Table II column instructions and derivative transaction codes.
Why it matters for Whale Tracking
Table II is necessary to reconstruct grants, exercises, conversions, cancellations, and expirations without misclassifying them as market purchases or sales. It documents contractual exposure but does not reveal the holder's motivation.
Technical Nuance
A Code M exercise commonly produces a derivative disposition in Table II and an underlying-security acquisition in Table I. Rows should be paired using accession, transaction date, sequence, security titles, and underlying share count while retaining any F or S disposition separately.
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Real-World Example
"An option exercise can reduce Table II holdings by 10,000 options and increase Table I common stock by 10,000 shares before withholding or sale. Counting both acquisitions would double count the economic event."
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