What constitutes insider trading?

Insider trading is defined as the buying or selling of securities based on material nonpublic information about the company. This activity typically involves an individual who has access to confidential information that can influence an investor's decision. By engaging in insider trading, the individual improperly discloses and misuses this privileged information to gain an advantage over other investors who do not have access to the same information.

In contrast, publicly available information does not qualify as insider trading since it can be accessed by all market participants without restriction. Similarly, proper market disclosures are made to provide transparency and fairness in the market, ensuring that all investors have access to the same information. Regular trading activities can involve buying and selling based on publicly known data, which does not constitute insider trading as it’s conducted legally and ethically. Thus, the key identifying factor of insider trading is the improper use of privileged information, making the identification of option C as the correct answer clear and justified.