Warner Bros (WBD) Surges 3.15% Amid Hostile Takeover Drama: What’s Fueling the Rally?

Summary
• Warner Bros Discovery (WBD) surges 3.15% to $28.645, driven by Paramount’s revised $30/share bid with Larry Ellison’s $40.4B guarantee.
• Intraday high hits $28.98, low dips to $28.47, with 17.77M shares traded—turnover rate at 0.76%.
• Options frenzy: 74,437 contracts traded for the $28.5 call, signaling bullish momentum.

Warner Bros Discovery’s stock is surging on a volatile day as Paramount’s amended bid for the media giant intensifies. The stock’s 3.15% rally reflects investor optimism over Larry Ellison’s personal guarantee and regulatory adjustments. With the 52-week high at $30 and RSI near overbought territory, the battle for WBD’s future is heating up.

Paramount’s $40.4B Guarantee Ignites WBD Shareholder Optimism
Paramount’s revised $30/share bid for WBD, now backed by Larry Ellison’s irrevocable personal guarantee of $40.4 billion, has recalibrated investor sentiment. The move directly addresses WBD’s board concerns about the Ellison family trust’s reliability, offering a concrete assurance of financial commitment. By matching Netflix’s $5.8 billion breakup fee and extending the tender offer deadline to January 21, 2026, Paramount has positioned its all-cash offer as a credible alternative. This strategic escalation has triggered a short-term rally as shareholders weigh the enhanced terms against WBD’s existing Netflix deal.

Options Playbook: Capitalizing on WBD’s Takeover Volatility
• 200-day average: 14.62 (well below current price)
• RSI: 72.21 (overbought)
• MACD: 1.66 (bullish divergence with signal line at 1.72)
• Bollinger Bands: Price at 28.645, 10% above middle band (26.36)

Top Options Picks:
• WBD20251226C28.5 (Call, $28.5 strike, 2025-12-26):
- IV: 26.46% (moderate)
- Leverage: 71.44%
- Delta: 0.547 (balanced sensitivity)
- Theta: -0.1618 (aggressive time decay)
- Gamma: 0.4476 (high sensitivity to price swings)
- Turnover: 74,437 (liquid)
- Payoff at 5% upside: $0.92 per contract (max(0, 29.99 - 28.5)).
- Why it stands out: High leverage and gamma make it ideal for a short-term rally, with liquidity ensuring smooth entry/exit.

• WBD20251226C29 (Call, $29 strike, 2025-12-26):
- IV: 24.96% (reasonable)
- Leverage: 168.09%
- Delta: 0.319 (moderate directional bias)
- Theta: -0.1042 (moderate decay)
- Gamma: 0.4277 (strong price responsiveness)
- Turnover: 104,592 (high liquidity)
- Payoff at 5% upside: $1.49 per contract (max(0, 29.99 - 29)).
- Why it stands out: Extreme leverage amplifies returns if WBD breaks above $29, with gamma ensuring rapid value shifts in a bullish move.

Action Insight: Aggressive bulls should prioritize WBD20251226C29 for a breakout above $29, while WBD20251226C28.5 offers a balanced play on sustained momentum. Both contracts benefit from WBD’s proximity to its 52-week high and elevated RSI.

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 returns over longer periods, such as 10 days and 30 days, are lower at 0.46% and 2.79%, 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, it did not consistently translate into sustained long-term gains.

WBD’s Takeover Saga Enters Critical Phase: Position for a $30 Breakout
Warner Bros Discovery’s 3.15% surge underscores the market’s belief in Paramount’s revised bid as a superior offer. With Larry Ellison’s personal guarantee and regulatory adjustments, the stock’s short-term trajectory hinges on whether shareholders side with Paramount’s $30/share all-cash proposal. Technically, WBD is testing its 52-week high of $30, with RSI near overbought levels and Bollinger Bands suggesting a potential breakout. Investors should monitor the $28.5–$29.5 range for directional clarity. Meanwhile, the sector leader Disney (DIS) remains flat at 0.78% change, highlighting WBD’s unique catalyst. Act now: Buy WBD20251226C29 if $29 breaks, or short-term traders can scalp the $28.5–$29.5 range with tight stops.