This study investigates the findings of previous insider trading studies that suggest insiders can earn abnormal profits by reading the Official Summary. Using approximately 60,000 insider transactions from 1975 to 1981, the study examines the availability of abnormal profits to insiders and outsiders, the determinants of insiders' predictive ability, and the effect of insider trading on trading costs for other investors. The study also discusses the implications for market efficiency and the evaluation of abnormal profits for active trading strategies. The study finds that insiders can predict future stock price changes and trade accordingly, buying before abnormal price increases and selling before abnormal price decreases. However, the abnormal profits earned by insiders are not necessarily large, and the study suggests that the results of previous insider trading studies using the Capital Asset Pricing Model (CAPM) may be biased. The study uses a market-model to measure expected returns and finds that the bid-ask spread is positively related to the expected loss to informed traders. This suggests that the bid-ask spread reflects the expected losses to informed traders. The study also finds that the expected loss to insiders is negatively correlated with firm size. Smaller firms have larger percentage bid-ask spreads, which implies that informed traders impose significant costs on uninformed traders. The study suggests that the bid-ask spread can be used as an approximate measure of the expected loss to informed traders. Including the bid-ask spread as an additional cost of trading can help evaluate the realizable abnormal returns to active trading strategies. The study also examines the availability of abnormal profits to outsiders following the first day insiders' reports are received by the Securities and Exchange Commission (SEC) and the day the Official Summary becomes publicly available. The study finds that outsiders can earn abnormal profits by imitating insiders, but these profits are reduced when considering trading costs such as the bid-ask spread and commission fees. The study concludes that the evidence supports the efficient markets hypothesis, as insiders can predict future stock price changes, but outsiders cannot earn abnormal profits net of trading costs after the public dissemination of insider trading information.This study investigates the findings of previous insider trading studies that suggest insiders can earn abnormal profits by reading the Official Summary. Using approximately 60,000 insider transactions from 1975 to 1981, the study examines the availability of abnormal profits to insiders and outsiders, the determinants of insiders' predictive ability, and the effect of insider trading on trading costs for other investors. The study also discusses the implications for market efficiency and the evaluation of abnormal profits for active trading strategies. The study finds that insiders can predict future stock price changes and trade accordingly, buying before abnormal price increases and selling before abnormal price decreases. However, the abnormal profits earned by insiders are not necessarily large, and the study suggests that the results of previous insider trading studies using the Capital Asset Pricing Model (CAPM) may be biased. The study uses a market-model to measure expected returns and finds that the bid-ask spread is positively related to the expected loss to informed traders. This suggests that the bid-ask spread reflects the expected losses to informed traders. The study also finds that the expected loss to insiders is negatively correlated with firm size. Smaller firms have larger percentage bid-ask spreads, which implies that informed traders impose significant costs on uninformed traders. The study suggests that the bid-ask spread can be used as an approximate measure of the expected loss to informed traders. Including the bid-ask spread as an additional cost of trading can help evaluate the realizable abnormal returns to active trading strategies. The study also examines the availability of abnormal profits to outsiders following the first day insiders' reports are received by the Securities and Exchange Commission (SEC) and the day the Official Summary becomes publicly available. The study finds that outsiders can earn abnormal profits by imitating insiders, but these profits are reduced when considering trading costs such as the bid-ask spread and commission fees. The study concludes that the evidence supports the efficient markets hypothesis, as insiders can predict future stock price changes, but outsiders cannot earn abnormal profits net of trading costs after the public dissemination of insider trading information.