President And COO Of Cloudflare Trades $5.5M In Company Stock

Michelle Zatlyn, President And COO at Cloudflare NET, made a large buy and sell of company shares on October 14, according to a new SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission states that Michelle Zatlyn exercised options to purchase 33,330 Cloudflare shares for $0 on October 14. They then sold their shares on the same day in the open market. They sold at prices ranging from $159.84 to $165.82 to raise a total of $5,462,398 from the stock sale.

Zatlyn still owns a total of 8,008,954 shares of Cloudflare in the form of derivative securities.

Cloudflare shares are trading up 3.78% at $174.03 at the time of this writing on Monday morning.

Why Insider Transactions Are Important

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

In legal terms, an "insider" refers to any shareholder who owns at least 10% of a company. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Transaction Codes To Focus On

Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates the insider may have been forced to sell shares in order to receive compensation that had been promised upon being hired by the company.

Check Out The Full List Of Cloudflare's Insider Trades.