Pairs Trading Idea: Short AT&T, Long Verizon (T, VZ)

On Friday, Verizon Wireless VZ said that the number of iPhones it sold in the first two hours of availability were more than the one-day total for any other device's debut in the company's history. The iPhone on the Verizon network is going to be huge. "Overall, it was a very good day," Verizon Wireless Chief Executive Dan Mead said in a statement. "Yesterday's launch set the pace for next week when we open up sales to everyone across America." Despite AT&T's best efforts to stem any damage to their business as a result of Verizon getting the iPhone, it is very unlikely that subscribers will not migrate. There is a trade here. If you had put on a long Verizon, short AT&T trade in the months leading up to this launch, you would have done very well. Over the last 3 months, VZ shares are up 8%, while T has lost 5.25%. In the last 6 months, VZ has risen more than 23% versus 4.69% for T. This is a 100% market neutral trade that has been offering up some juicy risk-adjusted returns. Now that iPhone for Verizon is here, bet that this trend continues.