Today Atlas Air Worldwide ($AAWW stock) announced a partnership with Amazon to provide air transport services. News of this possible pact came out last December so it wasn't a total surprise. The stock opened around $51 and para-spiked to a high of $57.77 in the first 5 minutes of trading! We immediately placed market orders to short $AAWW because the +51% upside move today was completely unwarranted.
The pact was supposed to be highly accretive to $AAWW earnings and cash flows and the company granted Amazon warrants to acquire up to 20% of $AAWW's common shares at a price of $37.50/share. A move of somewhere close to $40, a little premium above the $37.50 warrant price, would have been realistic. Hence we were confident in our short position in the $50's.
Content with our profits, we covered quickly unfortunately and left a whole lot of money on the table as the stock slow deathed another $8 from our lowest cover buy. Come trade with us in the MookTrader stock chat room. All trades are called out live as they happen with 100% transparency.
Net Profit: $2,216