Exploiting inefficiencies in the pricing of derivatives (warrants) of Webull stock to make money off a zero directional trade to make 6 figures in 2 weeks.
TLDR: Shorting Webull Stock at $27 buying Webull derivatives at $13.00 each. Webull derivatives convert to shares in May 10th, and I short Webull stock until then and make the difference - borrow cost for the next 2 weeks.
The Setup
* **Warrant**: BULLZ or BULLW (Webull Incentive Warrant)
* Price: \~$3/$2
* Strike: $10/$11.5
* Expiry: 2029/2030
* Exercisable starting **May 10, 2025** (30 days post-business combination on April 10)
* **Stock**: BULL (Webull Class A)
* Price: \~$27
1. Buy warrant for $3
2. Short stock at $27
3. When warrants become exercisable on May 10th, use it to buy a share at $10 and deliver to cover short
**Basic Math (20-day hold, 315% borrow rate)**
Net P/L = $14 – \[(borrow rate / 365) × days × short price\]
Borrow cost ≈ (3.15 / 365) × 20 × 27 = \~$4.66
**Net profit ≈ $14 – $4.66 = \~$9.34 per share**
If I have 10k shares, for example, that's $93K USD profit.
**"What about risks?" Here's every counterargument/question answered:**
*1. “Why not just exercise the warrant right now and sell the stock?”*
→ You can't. **Warrants are exercisable starting May 10, 2025**, per SEC filings.
2. *“What if they redeem your warrant for $0.01?”*
→ They can’t do that *until* the stock trades **above $18 for 20 out of 30 days**, *and* they issue **30 days’ written notice**. That’s **at least 50+ days from now**, and warrants unlock **May 10th, in 2 weeks,** before that redemption window even opens.
3. *“This sounds too good. What’s the catch?”*
→ The **only real cost is borrow fees** on your short. Even at 315% annualized, a 20-day hold nets \~$9.34 per share. The only way it becomes unprofitable is if CTB spikes to **>1200%+**, which is unlikely short term. Or if the underlying stock goes up 500% and you can't cover your short, then that's an issue if you're using margin.
* **Setup**: Long warrant / short stock
* **Directional risk**: Zero
* **Arbitrage spread**: \~$14
* **Net return**: \~$9.34 per share (after 315% borrow over 20 days)
* **Only risk**: Carry cost and CTB spike
This is true value investing! Buy Webull derivatives $13.00, short Webull at $27.00 and make the difference either way from market mispricing. Thought I'd share before the stock goes down too much for this to work or for the underlying warrant to go up too much. Either way, they'll converge as the exercise window gets closer.
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