Is It Time To Switch Gears On The Short Best Buy And Long Amazon Pairs Trade?
I’ve been personally considering this trade. There was just a large insider buy of Amazon as well. Amazon has been a tough stock to short because as long as revenue is rising, investors seem content to give it a pass on earnings.
May 27, 2012 | 2 comments | includes: AMZN, BBY
Pairs trades, going long one company while shorting another, provide outstanding returns for those that can identify trends in an industry or in the broader economy.
To say a pairs trade is risky, is an understatement. Using the equity from a short sale to cover a long position on another can decimate accounts in a very short time. Being wrong on either end of the trade can be costly. Wrong on both, disastrous.
One such pairs trade that has been to some an obvious trade for the last six years is to short Best Buy (BBY), while taking a long position in Amazon (AMZN).
via Is It Time To Switch Gears On The Short Best Buy And Long Amazon Pairs Trade? – Seeking Alpha.