Warner Bros (WBD) Surges 3.47% Amid Paramount's Revised $30/Share Takeover Bid – What's Next for Hollywood's High-Stakes Battle?

Summary
• Warner Bros Discovery (WBD) surges 3.47% to $28.735, trading near its 52-week high of $30.
• Paramount's revised $30/share bid now includes Larry Ellison's $40.4B personal guarantee and $5.8B breakup fee.
• Options volume spikes on 2025-12-26 expiring calls, with WBD20251226C29.5 seeing 744 contracts traded.

Warner Bros Discovery (WBD) is trading at its highest level since December 2025 amid a dramatic escalation in Paramount's hostile takeover bid. The stock's 3.47% intraday gain reflects renewed investor optimism as Paramount addresses WBD's concerns over financing credibility. With the stock trading near its 52-week high of $30, the battle for Hollywood's crown jewels intensifies as shareholders weigh their options between Paramount's all-cash offer and Netflix's $27.75/share deal.

Paramount's Revised Takeover Terms Spark Investor Optimism
Warner Bros Discovery's (WBD) 3.47% surge is directly tied to Paramount's revised $30/share takeover bid, which now includes Larry Ellison's personal guarantee of $40.4 billion in equity financing and a $5.8 billion breakup fee. The WBD board had previously criticized Paramount's initial offer as relying on an 'opaque' family trust, but the revised terms eliminate this concern by making Ellison personally liable for the financing. This move addresses WBD's demand for 'flexibility' in interim operations and aligns the breakup fee with Netflix's offer, narrowing the gap between the two bidders. The stock's intraday high of $28.98 suggests investors are pricing in a higher probability of Paramount's bid succeeding, particularly as the revised terms strengthen its regulatory appeal compared to Netflix's $27.75/share deal for just the studio and streaming assets.

Entertainment Sector Volatility as Netflix (NFLX) Trails Behind WBD
While Warner Bros Discovery (WBD) gains traction, the broader entertainment sector remains mixed. Netflix (NFLX), the sector leader, is down 1.26% as investors question the value of its $27.75/share offer for WBD's studio and streaming assets. The disparity highlights the sector's divergence: WBD's all-cable-asset bid is seen as more comprehensive, while Netflix's focus on streaming faces scrutiny over its $2.8 billion exit fee if WBD backs out. The sector's volatility underscores the high-stakes nature of the takeover battle, with WBD's 3.47% gain contrasting sharply with NFLX's decline.

Options Playbook: Leveraging WBD's Bullish Momentum with Gamma-Driven Calls
• 200-day average: 14.62 (well below current price)
• RSI: 72.21 (overbought territory)
• MACD: 1.66 (bullish divergence from signal line 1.72)
• Bollinger Bands: Price at 28.735, 35% above middle band (26.36)
• Kline pattern: Short-term bearish trend, long-term bullish

Warner Bros Discovery (WBD) is in a high-gamma, high-liquidity environment, making it ideal for options strategies. The stock's 3.47% intraday gain and proximity to its 52-week high of $30 suggest a short-term bullish bias, supported by the RSI's overbought reading and MACD's positive divergence. The 200-day average at $14.62 underscores the long-term upside potential, while the Bollinger Bands indicate strong momentum. Two options stand out for aggressive positioning:

• WBD20251226C29.5
- Type: Call
- Strike Price: $29.50
- Expiration: 2025-12-26
- IV: 26.28% (moderate)
- Leverage Ratio: 287.30% (high)
- Delta: 0.2044 (moderate sensitivity)
- Theta: -0.0731 (rapid time decay)
- Gamma: 0.320965 (high sensitivity to price movement)
- Turnover: 8,308 contracts
- Payoff at 5% Upside (29.98): $0.48/share
- Why: High gamma and leverage ratio make this contract ideal for a sharp move above $29.50. The moderate delta ensures it benefits from both time decay and price movement.

• WBD20251226C30
- Type: Call
- Strike Price: $30.00
- Expiration: 2025-12-26
- IV: 30.61% (high)
- Leverage Ratio: 478.83% (extreme)
- Delta: 0.1203 (low sensitivity)
- Theta: -0.0489 (moderate time decay)
- Gamma: 0.1947 (moderate sensitivity)
- Turnover: 24,490 contracts
- Payoff at 5% Upside (29.98): $0.00/share (strike not breached)
- Why: While the 5% upside scenario doesn't trigger profit, the high leverage ratio and IV make this contract a speculative play if WBD closes above $30.00 before expiration. The low delta means it's less sensitive to minor price swings but could explode if the stock gaps up.

Action Insight: Aggressive bulls should prioritize WBD20251226C29.5 for its gamma-driven payoff potential. If WBD breaks $29.50, this contract could see exponential gains. For a longer-term play, WBD20260102C29.5 offers liquidity and moderate leverage, but requires a sustained move above $29.50.

Backtest Warner Bros Stock Performance
The backtest of Warner Bros. Discovery (WBD) after a 3% intraday surge from 2022 to the present shows mixed results. While the 3-day win rate is high at 51.81%, the 10-day and 30-day win rates are slightly lower at 49.47% and 48.61%, respectively. The maximum return during the backtest period was 7.36%, which occurred on day 59, indicating that while WBD had a strong short-term performance, its long-term performance was more modest.

Hollywood's Takeover Drama: WBD at a Crossroads – Act Now or Miss the Show
Warner Bros Discovery's (WBD) 3.47% surge reflects a pivotal moment in its takeover battle, with Paramount's revised terms addressing key financing concerns. The stock's proximity to its 52-week high of $30 and the sector's mixed performance (NFLX down 1.26%) highlight the high-stakes nature of this corporate drama. Investors should monitor the $29.50 level as a critical inflection point: a break above could trigger a gamma-driven options rally, while a pullback might reignite Netflix's narrative. The sector leader, Netflix (NFLX), is underperforming, signaling skepticism about its $27.75/share offer. For those seeking leverage, WBD20251226C29.5 offers a high-gamma, high-leverage play on the stock's momentum. Act now: Position for a short-term breakout above $29.50 or prepare for a potential reversal if WBD fails to sustain its gains.