Guide

Form 4 code M, exercising an option granted by the company

Code M on a Form 4 means the insider exercised or converted a derivative security, such as a stock option, in a transaction exempt from Section 16(b) under SEC Rule 16b-3. For a stock option, it is the line where options granted earlier become shares.

Reading a Capital One option exercise

Capital One Chairman and CEO Richard D. Fairbank filed a Form 4 on October 29, 2026 for trades on October 27. In Table II, the Stock Options line shows code M, 40,743 options under (D), an exercise price of $86.34 in column 2, and in column 6 a date exercisable of February 15, 2020 and an expiration date of February 2, 2027. Column 9 shows 40,743 options still held after the exercise.

In Table I, the first line is also code M, 40,743 shares of common stock acquired at $86.34, which matches Instruction 4(c)(i) of the Form 4 instructions, where an exercise is reported in Table II as a disposition of the derivative and the underlying shares appear in Table I. Footnote 2 says the holding of 4,109,263 shares on that line includes shares bought through the company's dividend reinvestment plan since the last report.

Three S lines follow on the same date, 46,845, 37,025 and 6,873 shares at weighted average prices of $202.32, $203.29 and $204.19, for 90,743 shares sold, more than the exercise produced. Every Table I line points to a footnote naming a Rule 10b5-1 trading plan entered into on May 13, 2025, and the 10b5-1 box is checked. The M lines record the exercise alone, and the sale appears only in the S lines.

A Filing Ahoy alert for this filing would lead with the 90,743 shares sold, then give the exercise in a separate sentence marked as not on the open market, and list the options in a sentence of their own with the $86.34 exercise price.

When the code is X, O or C instead

Instruction 8 keeps a separate group called Derivative Securities Codes for exercises and conversions that do not fall under Rule 16b-3. X is the exercise of an in-the-money or at-the-money derivative, O is the exercise of an out-of-the-money one, and C is a conversion. M belongs to the Rule 16b-3 group alongside A, D, F and I.

Whatever the letter, Instruction 4(a)(i)(3) requires every exercise and conversion of a derivative to be reported, exempt from Section 16(b) or not. On an exercise, Instruction 4(c)(iii) also has the filer leave column 8 blank and put the exercise or conversion price in column 2, which is where the $86.34 in the example sits.

What Rule 16b-3 requires for the exemption

Rule 16b-3 exempts certain transactions between a company and its officers or directors from the short swing profit rule. For an acquisition from the company, such as an option grant, paragraph (d) offers three routes. The board or a committee of two or more non-employee directors approves it, shareholders approve or ratify it, or the insider keeps the securities for six months. For an option or other derivative, those six months are counted from the day the insider got it until the insider gets rid of it or of the shares behind it, and exercising or converting it does not stop the count.

Note 3 to the rule deals with later steps. Where the terms of a later transaction, such as an option's exercise price, were set in a grant approved under (d)(1), (d)(2) or (e), that later transaction needs no fresh approval. Note 1 adds that an exercise or conversion that does not meet Rule 16b-3 may still be exempt under Rule 16b-6(b).

Not financial or investment advice. Filing Ahoy reports what was filed; it does not tell you what to buy or sell. Filing Ahoy is not affiliated with the SEC.