Paramount Skydance Plummets 6.68% as Bidding War Fails – What’s Next for Media Giants?

Summary
• Paramount Skydance (PSKY) tumbles 6.68% intraday to $13.83, erasing $1.00 from its value in under 3 hours.
• Netflix’s $27.75/share WBD deal triggers regulatory and strategic uncertainty for PSKY’s $30/share all-cash bid.
• Options volatility surges: 20 contracts trade with implied volatility ratios above 50%, signaling heightened bearish positioning.

Paramount Skydance’s stock is in freefall after losing its high-stakes bid for Warner Bros. Discovery to Netflix. With intraday losses of 6.68% and a price range of $13.575–$14.41, the entertainment sector is recalibrating to a new media landscape. The stock’s collapse reflects not just a failed acquisition but a strategic crossroads for Ellison’s media empire.

Failed Bid for WBD Sparks Sharp Sell-Off
Paramount Skydance’s 6.68% intraday plunge stems from its $30/share all-cash bid for WBD being rejected in favor of Netflix’s $27.75/share partial acquisition. The move undermines PSKY’s strategic narrative of consolidating media assets, while regulatory skepticism and tax inefficiencies in Netflix’s bid amplify uncertainty. With WBD shareholders set to gain $660 million in value and Zaslav’s wealth, PSKY’s hostile $30/share offer now faces scrutiny as a mispriced gamble. The stock’s collapse reflects investor doubts about Ellison’s ability to outmaneuver Netflix in a regulatory and financial arms race.

Entertainment Sector Volatility as NFLX Also Retreats
The entertainment sector is under pressure as Netflix (NFLX) declines 3.49% intraday, mirroring PSKY’s bearish momentum. While PSKY’s drop stems from a failed acquisition, NFLX’s retreat reflects post-deal profit-taking and regulatory headwinds. The sector’s mixed performance highlights divergent strategies: PSKY’s aggressive consolidation bets versus NFLX’s defensive streaming dominance. With WBD’s pay-TV networks still unpriced, the sector remains fragmented, creating asymmetric risks for acquirers.

Options Playbook: Capitalizing on Volatility with PSKY20251219P14 and PSKY20251219P13.5
• MACD: -0.265 (bearish divergence), Signal Line: -0.241, Histogram: -0.024 (negative momentum)
• RSI: 44.78 (oversold territory), Bollinger Bands: $14.55 (lower band) vs. $16.54 (upper band)
• 30D Moving Average: $15.63 (price below key support)

Technical indicators confirm a short-term bearish bias for PSKY, with RSI near oversold levels and MACD signaling weakening momentum. The stock is testing its 30D support range of $14.79–$14.84, with a critical 200D MA gap unresolved. Options traders are capitalizing on elevated volatility, with 20 contracts trading at IV ratios above 50%.

Top Option 1: PSKY20251219P14
• Code: PSKY20251219P14
• Type: Put
• Strike Price: $14
• Expiration: 2025-12-19
• IV: 55.36% (high volatility)
• LVR: 42.80% (aggressive leverage)
• Delta: -0.413 (moderate sensitivity)
• Theta: -0.047854 (rapid time decay)
• Gamma: 0.3469 (high sensitivity to price swings)
• Turnover: 9,940 (liquid)

This put option offers a 42.8% leverage ratio and 55.36% IV, ideal for a 5% downside scenario. Projected payoff: max(0, $13.830.95 - $14) = $0.02 per share. The high gamma ensures responsiveness to price swings, while theta decay favors quick execution before expiration.

Top Option 2: PSKY20251219P13.5
• Code: PSKY20251219P13.5
• Type: Put
• Strike Price: $13.5
• Expiration: 2025-12-19
• IV: 50.06% (moderate volatility)
• LVR: 30.43% (balanced leverage)
• Delta: -0.4187 (moderate sensitivity)
• Theta: -0.004867 (slow decay)
• Gamma: 0.2810 (moderate sensitivity)
• Turnover: 2,543 (liquid)

This put offers 30.43% leverage and 50.06% IV, with a projected payoff of max(0, $13.830.95 - $13.5) = $0.36 per share. The low theta decay allows time for a sustained move, while gamma ensures responsiveness to price gaps.

Action: Aggressive bears should prioritize PSKY20251219P14 for rapid decay and high gamma. Conservative bears may hold PSKY20251219P13.5 for a slower, more durable position. Both contracts benefit from PSKY’s 30D support breakdown and regulatory uncertainty.

Backtest Paramount Skydance Stock Performance
Here is the event-driven back-test you requested, together with a concise discussion of the results and the assumptions we made while preparing the analysis.jgy-json-canvas{"show_type":"jgyNewLowcode","config":{"type":"iwencai/stockBackTesting","version":"0.0.2","url":"https://cdn.ainvest.com/frontResources/s/aime-frontend-foiegras-outer/stockBackTesting/0.0.2/stockBackTesting@0.0.2index.js"},"data":{"datas":[{"Backtest Object":"PSKY","Backtest Event":"Daily plunge ≤ –7 % (close-to-previous-close)
Event dates: 2022.01.24 … 2025.12.04 (19 events)","Backtest Period":"2022.01.01 – 2025.12.05","backtest_result":"https://cdn.ainvest.com/backtest/agent/session/784562/daa19a97-7b24-4db6-9018-77db9718f85d/5a099821-da5b-40c2-8bab-477c369628af/psky_minus7_event_backtest.json"}]}}jgy-json-canvasKey Take-aways1. Event definition & assumptions • “–7 % intraday plunge” interpreted as a daily close-to-previous-close drop of –7 % or worse (intraday low data weren’t available, so the proxy is daily close). • Look-back start: 1 Jan 2022. End: 5 Dec 2025 (latest data point available). • Analysis window: 30 trading days after each plunge (default event-study horizon). • 19 qualifying events met the –7 % threshold.2. Post-event performance highlights (vs. same-length buy-and-hold benchmark) • Immediate reaction (Day +1): average –1.2 % vs. –0.02 % benchmark → weak negative drift, low statistical power. • Short-term (Days +1 to +7): modest recovery; cumulative return turns positive (~+1.18 %) by Day 7, but not statistically significant. • Medium-term (Days +8 to +16): clear outperformance emerges. From Day +8 onward, event returns become significantly positive, peaking at Day +26 with +11.7 % vs. –1.0 % benchmark. • By Day +30 the average cumulative return is +8.9 %, still handily ahead of the –1.25 % benchmark, with win-rate ~56 %.3. Practical implications • Historically, buying PSKY at the close of a –7 % down day and holding ~2-4 weeks has delivered favorable risk-adjusted pay-offs. • The strongest edge appears around trading days +8 to +26; consider profit-taking once gains exceed ~10 %. • However, only 19 events exist—sample size is limited, and survivorship/selection bias may be present. • Intraday data might refine the signal; if available, detecting –7 % drawdowns from intraday lows could identify additional events or improve precision.4. Next steps (optional) • Re-run with true intraday low data to align precisely with the “intraday plunge” definition. • Stress-test results across different market regimes (e.g., bull vs. bear markets). • Incorporate risk-controls (e.g., stop-loss, take-profit) and simulate transaction costs to evaluate implementability.You can interactively explore the full event-study charts and statistics in the module above.

Act Now: PSKY’s Volatility Presents Strategic Entry Points
Paramount Skydance’s 6.68% intraday drop reflects a pivotal moment in media consolidation, with regulatory and strategic risks dominating the near-term outlook. The stock’s technical breakdown below its 30D MA and RSI’s oversold reading suggest further volatility, but options like PSKY20251219P14 and PSKY20251219P13.5 offer asymmetric rewards for bearish bets. With Netflix (NFLX) also down 3.49%, the sector remains in flux. Investors should monitor PSKY’s 14.83–14.84 support range and the 13.5 Bollinger Band for potential reversals. For now, the options market is pricing in a 55% IV spike—don’t miss the window.