Exploiting inefficiencies in the pricing of derivatives (warrants) of Webull stock to make money off a zero directional trade to make $100k+ 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. But yes, you can buy the Webull Stock at $13.00 because it's a $10 strike for $3.00 a Call option warrant even though the stock is trading at $27.
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
In summary, AS OF NOW you can buy Webull derivatives $13.00, short Webull at $27.00 and make the difference either way from market mispricing warrants or the stock. This might change if the stock goes too low or Webull warrant goes up too high.