This is one of the cleanest asymmetrical arbitrage trades I've seen in a while now because Warrants are mispriced and shorting is now available.
For more specific math behind this:
# 📊 Profit per share (20-day hold, 315% borrow rate):
Net P/L = $14 – \[(borrow rate / 365) × days × short price\]
Inputs:
* Arbitrage spread = $14
* Borrow rate = 315% = 3.15
* Short price = $27
* Days = 20
Calculation:
Borrow cost=(3.15365) × 20 × 27 = 0.00863 × 20 × 27=4.66
Net Profit:
14.00−4.66 = \~$9.34 per share guaranteed.
Here’s the play:
# ⚙️ The Setup:
1. **Webull Warrants** — Current Price: \~$3.00 • Strike Price: $10.00 • Expiry: 2029 • Fully cash-settled
2. **Webull Stock** — Ticker: `BULL` • Current Price: \~$27.00
# 💡 The Trade:
You buy **1 Bull warrant** for **$3.00**, which gives you the right to acquire 1 share of BULL at $10 any time before 2029.
Then, **you short BULL stock at $27.00**.
So for each unit:
* **Cost basis**: $3 (warrant cost)
* **Short proceeds**: $27 cash
* **You’re fully hedged** — You can deliver the BULL share anytime using the warrant (pay $10 strike) in 1 month, keeping the $14 spread.
# 💰 Your Profit:
* Short sale: +$27
* Exercise warrant: -$10
* Buy warrant: -$3 ➡️ **Net: $14 profit per share, locked in** ➡️ **ROI: $14 gain on $3 cost = \~467% return**
And there’s **no downside risk** because your short is fully covered by your long-dated right to buy the share at $10.
# 🛡️ Risk? Minimal — But Here’s the Catch:
* **Warrant is long-dated** (expires 2029)
* **You can hold the short forever** — there's no borrow risk if you locate the shares first and manage the margin
* **Main risk? Borrow fees.** The cost to maintain your short position could eat into profits. Right now borrow rates are elevated — so you’ll want to size accordingly or rotate in/out if rates spike. Only issue is if borrow rates go to 3000%+ or something where it becomes unprofitable but otherwise even at elevated levels like 315% you'll always make money.
# 🏦 Capital Structure Notes:
This setup only works **because the warrant is so underpriced** relative to intrinsic value.
Intrinsic value = $27 (stock) - $10 (strike) = $17
Warrant trades at **$3**, giving you a $14 spread.
If this mispricing corrects, either:
1. Warrant rises to \~$17, or
2. Stock falls, compressing the spread.
But **if you short the stock and long the warrant**, you don't care what happens — the spread is your arb. We've seen the stock crash 27% today and the Warrant go up in price so some traders might have caught on already.
# 🔁 TL;DR
* Zero directional risk
* \~$9.34 per share guaranteed.
* Only real cost is carry/margin/borrow that eats into arbitrage spread
This is free money literally for each warrant/share you're able to buy and short.
Positions: $40K+ LONG BULL Warrants, Short BULL stock as a hedge due to warrant underpricing. I win either direction, gg market makers.
https://preview.redd.it/q5p0o47gvgve1.png?width=938&format=png&auto=webp&s=6867bafb0d8972155031670fd9728610aaddb6c1